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[rant] Seriously? Software pricing is officially nuts

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mwb1100:
one has to look at whether or not they NEED a lifetime license or if paying for an upgrade WHEN IT IS NEEDED is justifiable.
-Josh (November 18, 2009, 09:52 AM)
--- End quote ---

Here's a rant that I was about to post on UltraEdit's forum about pricing for UEx (UltraEdit for Linux).  I didn't post it there because:

1) I don't really have any interest in UEx at the moment, so it would be me ranting about something that doesn't really apply to me
2) it's a rant, and the IDM support formum isn't really the place for a rant

But since this thread is a rant thread (hey, it's in the title), and I think some people might find it interesting, here goes:

I'm licensed for unlimited upgrades on the Windows version of UE Studio, so I looked at what UEx offers might apply to my situation.

I don't really need to pay extra for a 'multi-platform' license (I'm already licensed for life on Windows), I guess the way to go is to just buy UEx at the intro price - $40.  That seems reasonable and fair.  However, it looks like if I want to get a lifetime license on that, the price jumps to $180.  Wow!  Add 350% onto the 1 year price.  That seems pretty steep.

Let's look at what happens if I decide not to go with today's lifetime license deal, and decide to go with paying for 2 year licenses over time.

I'll assume that I get 2 years today at $60 (that seems to be today's current intro price for a 2 year license).  Future purchases will use the current announced regular retail price of $70, with a 50% renewal discount and %80 of that added back on for the 2nd year (which I think is the current policy IDM has):

  Years 1 & 2 - $60
  Years 3 & 4 - $63 (assuming 50% discount off non-intro price of $70 and 80% second year fee)
  Years 5 & 6 - $63 (same as above)
       
       total - $186
 
I won't start seeing 'payback' on a lifetime license investment until 7 years from now.

Of course, this does all assume that UEx prices and the percentages that are involved in upgrade discounts and 2nd year bumps don't change. But it also doesn't factor in the time value of the money I wouldn't spend today on the lifetime license,  the small risk that UEx will be dropped or wither into virtual nothingness (so the lifetime license would have little or no value), the fact that I might choose to not upgrade at a particular interval if I don’t need whatever new features are available at that point in time (increasing the time value of the money I’d spend today on a lifetime license), or the risk that I simply won’t need or want to use UEx at some point in the future (so won’t need to pay for upgrades at all).

There’s a lot of complexity here, but it seems to me that a lifetime license should be priced at point where the value of it is *clearly* more than buying 2 year licenses over time. I’d think that it should be priced where this stuff wouldn’t even cross my mind.  But maybe it means that lifetime licenses just don’t make sense from a customer and/or business point of view.  I hope that’s not true, because in general, I like them.

--- End quote ---

zridling:
Wow, thanks for the quote, and the math, mwb. I've used the calculator to make a lot of sound decisions in my life:

-- Is it cheaper to buy new, or fix and maintain the old?
-- Is that certification going to earn me a raise, or will it be resume fodder, and in two years mean spit?
-- Should I spend my last five dollars on a gallon of chocolate milk now, or five "Piss-It-Aways" lotto tickets?

Stoic Joker:
I remember back in the Win98/2000 days I thought ACDSee was one of the coolest image programs out there. However after XP and the built in (and lightning fast) image viewer I no longer had a use for it.

$280?!? ROFL ...I've actually passed up several opportunities to get (quality) pirated copies of the program because it wasn't worth the space to store on the drive.

OldElmerFudd:
ACDSee Pro was a good software for the Photo Enthusiast and/or Advanced Amateur market. I can't speak to its' recent versions, but it sounds like the developers fell prey to loading the code with multiple features. Lifetime licenses for high-end software is an extravagance, imo, as my needs change over time. Among other things, I'm a semi-retired pro photographer, using Phase One, Lightroom 2, and Photoshop CS2. Don't feel the need for any upgrades.
 ;)

Jimdoria:
If you really want the low-down on the fun and whacky world of software pricing, this article by Joel Spolsky is the best treatment I've seen, and fun to read too! (At least as fun to read as any blog post containing charts and spreadsheets can be.)

http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html

The gist of the article in a nutshell is that software companies are trying to price their products to capture consumer surplus, which is...

...the extra value that rich consumers get from their purchase that they would have been perfectly happy to do without.

It's sort of like if you were all set to buy that new merino wool sweater, and you thought it was going to cost $70, which is well worth it, and when you got to Banana Republic it was on sale for only $50! Now you have an extra $20 in found money that you would have been perfectly happy to give to the Banana Republicans!

Yipes!

That bothers good capitalists. Gosh darn it, if you're willing to do without it, well, give it to me! I can put it to good use, buying a SUV or condo or Mooney or yacht one of those other things capitalists buy!

In economist jargon, capitalists want to capture the consumer surplus.

Let's do this. Instead of charging $220, let's ask each of our customers if they are rich or if they are poor. If they say they're rich, we'll charge them $349. If they say they're poor, we'll charge them $220.

--- End quote ---

Turns out pricing's not nuts - it's just very, very crafty.

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