Autodesk entices customers to upgrade, subscribe

Design software vendor, Autodesk, is offering large discounts on its software in order entice customers to either upgrade to the latest versions and or take up an annual subscription program.

Autodesk sells generic design software AutoCAD, as well as a slew of versions based on industry verticals (such as building and construction, and manufacturing). For most of Autodesk’s products sold in Australia, the vendor runs a single-tiered channel model, dealing direct with around 45-50 resellers. However, Scholastic distributes its 2D modeling software to the retail and education markets.

In New Zealand, the software is distributed by Tech Pacific.

The vendor has announced that it will retire its AutoCAD 2000 range of products on January 15 and is undertaking drastic steps to convince customers to upgrade to its AutoCAD 2004 range.

As of January 15, customers that purchased AutoCAD 2000 would no longer be able to upgrade or cross-grade onto new versions, nor receive any technical support for the products.

“To support over twenty years worth of software releases would be very expensive and would adversely affect the pricing structure for future products,” sales and development director South Asia Pacific, Frank Sgammotta, said. “At the end of the day the customers choose – we don’t force them to do anything,” Sgamotta said. “What they have already purchased is a perpetual license, so they can use it forever, they will just no longer receive support.”

To entice users to migrate to the new version before January 15, the vendor is offering discounts of between 20-32 per cent on its new products.

Sgamotta said resellers would see the same margins on discounted products as they would on the list price.

The vendor is aware that many existing Autodesk customers have spent considerable amounts of money on their current versions and are not likely to be impressed about being strong-armed into upgrading.

Autodesk has come up with a means to satisfy the needs of these existing customers by offering them 20 per cent off the list price of new products after the January cut-off date.

However, even with a 20 per cent discount a customer is looking at paying about $4000 when purchasing software off-the-shelf, whereas the upgrade price is a much more attractive $2500.

And there is another catch. Autodesk will only offer this “loyalty program” discount to customers that sign up to the vendor’s new subscription program.

Under this maintenance program, users pay Autodesk a recurring annual fee which entitles them to any extensions and upgrades released during the year as well as some limited technical support.

However, Sgamotta refused to state what kind of margin a reseller received once they signed a customer to the subscription program.

Subscription programs, in essence, give customer ownership to the vendor rather than the reseller, and are generally treated with some caution by the channel.

Sgamotta would not discuss what kind of recurring revenue a partner might receive – to reward the partner for acquiring the customer in the first place - when a customer subscribes or renews their subscription with the vendor.

“Maintenance programs are good for everybody,” Sgamotta said. “Larger organisations love it because it becomes a maintenance cost rather than a Cap[ital] Ex[penditure] cost. It is much easier to budget for.”