The Lie Of Savings In CAD CAM Subscriptions

OK folks as the clock ticks down quickly towards serfdom for many I want to post this. It will be the last time I do so in this fashion because quite frankly if you are silly enough to go for subscription models you will deserve what you get. For those who may still be on the fence though I want to put some real numbers out there based upon Autodesks pricing for Inventor Pro HSM as of today. http://cam.autodesk.com/pricing/

Before we look at the numbers I want to make sure you readers understand that there will be prices and fees for other things to as time goes on. How many remember the unlimited data for smart phones when first offered? Get you in there and it looks cool and it is pretty cheap. May I ask you smart phone users where these cheapo plans are today? May I ask you if you don’t like it what alternative you have besides dump the data? Might as well go back to that flip phone you all despise so much if you don’t feed the data extra charges monster. The very first thing that comes to my mind is data storage and usage online to make all this cloud stuff work well. Of course it goes without saying things like data caps will be impacted for those of you who buy into iPad and Surface Pro do-dads because of course anything cellular will be an extra cost above and beyond the Autodesk subscription.

Something that can’t be predicted exactly is the ancillary costs associated with the problems of being forced to work the way Autodesk wants you to and not how you want to with updates and version preferences. You will take what they give you when they give it to you and marvel as their marketing and publicity people want you to over the loss of control over this part of your business life. Remember though the joy of painless auto updates as promised by those putting lipstick on this pig.

Now to the dollars and cents. I could not find the average length of time a company or seat holder stays with the same CAD or CAM software. I am going to use what I have observed around here as a metric though and once a shop gets going on a program that works they tend to stay. 15 years + is more common than you think. You guys just starting out and thinking 15 years is an eternity and does not apply to you are dead wrong. The 15 years go by fast and then so do the next 15. Unless there is a big shakeup I think we see the main players in CAD and probably for CAM also for an indefinite period of time. You start today and chances are good if you stay with the same company you will be using the same program for many years. Certainly the company will no matter who is there.

Initial year of Inventor Pro HSM full tilt retail is $11,500.00 with one years maintenance. As many of you experienced hands know prices are more negotiable than the sales shmuck would lead you to believe so for many the cost here is less. I highly doubt there will be much in the way of discounts or negotiation for subscriptions which for Inventor Pro will be $3,700.00 per year. That’s right one-third of the cost to buy it outright. Every year. Don’t pay don’t play.

So in ten years we have $11,500.00 + 10 x $1,500 per year maintenance for a total of $26.500.00
Subs cost is 10 x $3,700.00 or $37,000.00 + additional unknown and uncontrollable ancillary expenses and loss of control of your program to boot. In addition you have to continue with subs as long as you ever think you will need to use your data.

In 15 years permanent seats will have cost $34,000.00 with no ancillary costs of course and complete control over everything.
Subs cost will be $55,500.00 no control and ??? extra fees.

I want everyone to know I am a believer in the fact that permanent seat Inventor Pro HSM is the single best deal out there today for what it can do and the cost. I am not crazy about Inventor but as I have said before lots of great work is done with it and HSM is unbeatable as long as it’s feature set matches your needs. For the vast majority of shops it does. When it becomes subscription only though the value in my eyes has been seriously compromised.

I get tired of the mindless smiley faces Marketing and Publicity put on bad deals. Perhaps a disconnect from reality is required to get one of these degrees as M&P distortion of playing field reality is common to almost every company I have dealt with. It saddens me too that this whole subscription thing has been touted as guaranteeing Autodesk’s income stream to investors via the methodology of data hostage taking rather than customer loyalty created by superior products and voluntary cash transfers.

Just what exactly does that CPA MBA mindset say about regard for customers? Here, if you are wondering let me help you out. It means their money and success are important. It also means yours is not. Dump the subs only garbage Autodesk. I think you are making a big mistake that will come back to haunt you.

6 responses to “The Lie Of Savings In CAD CAM Subscriptions

  1. Dave-
    You bring up some interesting ideas in your posting and I appreciate your ideas. I am still learning the ins and outs of the subscription policies that are taking place within the CAx/PLM markets. There are a couple things I’d like to point out that you may or may not know but the readers might appreciate.
    You bring up several topics that need to be better explored.
    1) Subscription vs perpetual licensing
    2) Software support and future versions
    3) Data storage and access vs ransomware
    I’d like to quickly hit on subscription vs perpetual licensing. I think we can both agree that subscriptions are meant for organizations that have flexible budgeting policies or are more concerned with monthly cash flows. An example is large companies that provide fixed budgets or say a government entity that prefer onetime large sum payments. This reduces the paperwork and, in accounting terms, is a CAPEX or capital expense. For smaller companies the subscription becomes a normal OPEX or operating expense- it becomes a cash flow function for the business. An example here is that a company will generally rent the building and facilities then outright purchase the land and building. Another example would be buying a car vs renting a car. If you buy a car you are generally stuck with it because you have financed the car. You may not like it a year or two later but you are stuck with it. While renting allows you change the vehicle out from time to time. The renter understands that you will pay a premium for the flexibility and that is one of the reasons subscriptions are being offered.
    There is also a basic marketing principle that is being applied to subscriptions and the software companies fully understand this. They may not tell their customers this but they know and understand. That principle is this: The more times you have contact with the company the more apt you are to come back. This is the whole reason you can get a card for $25 that allows you to receive 5 oil changes with a $10 discount. Once you visit the 5 times it more than likely you aren’t going to go anywhere else and you will bring you other car needs along too! It’s a “business habit”! Need your tires rotated? $20. Need a new cabin air filter? $60. Air filter? $40. The CAx/PLM model is hoping this can be true for them as well. Like my CAD? Try my CAM? Like my CAD and CAM well let’s talk PLM? Oh, now let’s talk about other parts of your business.
    Subscription has its benefits for the SMB- no doubt there. But if they plan to use the software for more than 3 years well, perpetual licenses are a better value (I’m using the 3-year number based on the breakeven numbers I recall from Siemens PLM subscription webinars.) because of the premium you are paying for “renting” the software.
    If a company is only using a subscription model for everything then you can see the market that they are targeting- SMBs. Until companies change they way they assign budgets both subscription and perpetual licenses are needed by the vendor. You can say either one or two of the big CAx vendors understands this or one is just trying to capture more market share and hope it’s enough to cover any lost revenue from those that can’t or won’t do large lump sums.

    • Hi Ryan,
      Data storage, even redundant data storage is to cheap to consider the cloud with your intellectual lifeblood. That which quite often you are held accountable for security wise. Pella Windows comes to mind as a perfect example to me of the fallacy of the CAPEX scenario you bring up. They are on ST6 because of all the subsidiary programs they have written and integrated with that take time to do. They could never go the subscription route because that would force them to the latest and greatest and completely trash the way they want to work. This is true in many places and many of the very biggest as well. Operating on older versions of NX or Catia due to the hassle of moving on being greater than dealing with a known situation. Yes they do move on in time but of their own choosing. I don’t think book keeping is the principle driver in software purchases. Of course accountants are strange in the advice they give. I remember being told to buy a new vehicle because I needed the deduction. I didn’t need or want one so my question to the CPA was why buy something just for a tax shelter that I don’t need? Why are you not advising me to buy a piece of production equipment that will provide future greater income with this money instead of that new car smell that costs money? It kind of threw him for a loop and that was the last year I used him. CPA’s have their place but the engineer needs to make the final decisions if long term success is the desired metric.

      I use that basic marketing principle but lets word it a little differently. How about your best source of easy new business is the customer you already have. Who knows you and trusts you and so when you present your new service to them they will buy. BobCAD is in front of peoples faces all the time and I doubt that more contacts mean more business. The reason the marketing principle you mention does work often is because the VOLUNTARY transfer of cash is deemed worthy on both sides.

      As a comment here. If a big company or medium or small for that matter has given CPA’s the power to determine that it is OK to needlessly run up your expenses and become data hostages to as a result just to fit a category they deserve to waste their capital and will. If you need software this year you will need it for as long as the company is in business. How can you go back to slide rules and pencils if you make things? So if a company starts using software to design and machine they will continue for the next 50 years if they stay in business that long. WHY would anyone want to more than double their costs and induce severe complications into their workflow? I think the CPA’s are by and large going to be ignored on this one. You can change buildings and location but the way you work is far harder to change and more important to boot.

  2. Hi Dave
    I think your heads-up on the cloud-subscription software model is pretty accurate but I suspect it will be missed, or fall on deaf ears, for many.
    The maxim of caveat emptor (buyer beware) that used to apply in life is being superseded by a naive belief in the compensation culture, and that all our stupid decisions can be blamed on some 3rd party, who will be made to pay. It is the job of the marketeers and salesmen to present the case for their paymasters. While we should expect them not to lie to us, it is not their job (as they see it) to draw attention to any downsides of their product, and it is always harder to notice what is missing than what is wrong.
    I have long believed in being an informed purchaser, wanting to know exactly what I was buying. I have stopped being surprised by suppliers telling me that “No-one has asked that question before”, and then saying they don’t know the answer so something I regarded as fundamental to the product or service.
    “Pay and pray” seems to be the modern way.
    It is therefore very helpful to have a disinterested party (consumer organisation, or in this case you) draw attention to some of the wider facts and consequences so that a (more) balanced decision can be made.
    Thanks for spending the time to do so.
    Alan

    • Hi Alan,
      I don’t know why more are not interested in what is going on or care even if they do. You are so right in what you say. Autodesk will have plenty of attention I figure when this subs only model starts to hit home with the first big account they hope to win after this starts. When they are told, and they will be that permanent seats are the only way this big new account will buy into Autodesk we shall see.

      It baffles me how can anyone be fooled into thinking subs is wise for them when the bad numbers are right there in front of them.

  3. Hi Dave,
    I think it is more likely that Autodesk will end up terminating permanent seats rather than backing off. They will make some excuse like: “the majority of our business is now derived from the cloud and so we are ‘reluctantly’ phasing out the ‘redundant and inefficient’ methods of delivery”, or some such. They may even drop reference to “engineering tool” in their advertising and offer a PC phrase like “wholesome entertainment for the mildly numerically advantaged” instead. It was famously declared that ‘the market would decide’ the fate of the ‘social industry experience’ platform when the end of SW was indicated, remember?

    As you note perpetual upgrades are noticeably more lucrative for the venders and when customers are to all intents and purposes captive or powerless, the corporates can just thumb their noses at the few complainers who dare to make a dissenting noise. Walking over the little people probably seems like a perfectly reasonable extension of composing the one sided license agreements they have foisted on people for years, and Autodesk have been conspicuously good at that. You don’t own it, we write the rules, so get used to it. Yada, yada. This has been the big contemptuous head fake all along IMO. It follows along the lines of all the other monstrous offences and abuses we have observed to be now legitimised operations in government, the military, big business and the banking system.

    It is a crooked fascistic world we have descended into largely because people have not stood up for their rights and for the observation of regulations and laws. The self serving over reach in the CAD world was attempted first by Dassault and it largely failed due to their own ineptitude but it started others in the same direction. I regret we couldn’t muster a more spirited defence at the time on behalf of all CAD users and then we wouldnt need to have gone down this erroneous path but too many people were meek and complacent. Give an inch and they will take a mile..and your grandmother to sell if they can…

    You may have heard that recently DS announced they would do away with the minimal penalty for being off SW subs so that now you are compelled to pay all due amounts for skipped releases regardless. This is a real slap in the face for SW users in comparison to how SW was run in the past. Considering many SW users will be in small businesses it is all but an undeclared act of fiscal hostility on the very people that made SW such a success. When did shafting your customers with contempt become acceptable behaviour? I guess the answer to that is that when you know you have nothing new to provide either because you screwed up your product development strategy or you have no idea where to go next nothing is off the table. Really it amounts to the same thing as the rent seeking model we saw previously. I wonder how long it will be before corporations try to impose some retroactive licence condition on the release sitters like myself should we become too numerous.

    I perceive this year will be the year the global economic situation founders and many more people find themselves wanting to minimise any unnecessary expense. The only way corporates will keep earnings up or indeed even survive a big shakeout is to coerce both their active and inactive customers to pay up whatever so yes folks the men in black peddling CAD slavery will soon come knocking on your door….
    This was foretold by great CAD monkeys in sacred blog writings and so it will come to pass.

    • Hi Neil,
      I think the biggest source of hope is the impossibility of the subscription model to satisfy the requirements of larger accounts. Then again it just might be the first lawsuit brought by a company who has been damaged by cloud exposure forced as a condition of software use. When Autodesk and all the others who act the same way resist making the victim whole there will be a shake out. Autodesk is no more egregious on their EULA than any of the others by the way, they all stink.

      One of the interesting things going on in the back ground is the involvement of the military in creating standards by which CAD companies must comply with soon to be a government contractor/vendor. Just how is the military going to react here to security problems with data ownership which was traditionally served well by permanent seats as compared to having to pay to play just to access your legacy data if the subs model holds up and spreads? I think CAD companies may really want this but that it is not a done deal and they have not and will not satisfy large segments of their customer base with subs only. If subs with Autodesk hold up for two years and start spreading I will really be worried.

      You mention going off maintenance Neil and this is the biggie for lots of people. I went off miantenance with SE this year and I fully intend to use it for the next five plus years and not spend another dime. I will join the growing legion of SW users doing the same. What is going to happen is a whole lot of us are going to discover that we don’t need a CAD product that abuses us or takes us for granted. If Autodesk goes subs only they are going to find out just how long many can go on their existing permanent seats and never upgrade. I am amazed at how many shops around here do just fine with software ten years old and they think we who have diligently renewed so often are the crazy ones.

      Personally speaking if my CADCAM vendors make me angry enough I can do just fine without renewing again with anyone. In house design and manufacture and since my current software runs on Win10 if I wish I am good to go for the next eight years and by then I am retired.

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