Pricing Trends in the CAD Industry

January 8th, 2014

Change happens on a consistent basis and the CAD industry is no different.  CAD users became accustomed to regular releases, which eventually gave way to yearly releases.  This change has made it difficult for users to stay up to date on the software and the tools available.  But we, the users, are diligent.  Another change in our midst is how we obtain our CAD software.  Yes, change is inevitable; the software we use is constantly changing and how we purchase these tools is also changing.

In the past we would receive a floppy disk that we used to install the software.  That eventually changed to CDs.  Then to DVDs.  Then to USB thumb drives.  Now we just download the software from a website.  Once upon a time we even received manuals with the software media.  This eventually morphed into manuals in the form of PDFs that were included with those CDs, then the DVDs, then none at all—we visited a website for the manual.  Help files have even changed over the years.  They used to be CHM files, and now they too are web-based.  As you can see, everything changes.

It has been a major misconception by many users that the software we purchase and use is ours.  Many of us incorrectly believed that because we owned physical media (the floppy disks, the CDs) we owned the software.  That part has never been true.  What we did own was a license to use the software under specific circumstances. 

Pre-Internet, it was easy enough to install one license of software on multiple computers.  That was a violation of your license and it still is.  Now, software companies use the Internet to verify software licenses.  The software will communicate with the vendor’s servers via the Internet to verify that you actually do own a license to use that software.  It’s not foolproof, but it does help.  It also causes frustration when there is trouble communicating with the licensing servers.

Types of Software Licenses

There are many types of licensing methods for the CAD software we purchase.  They are perpetual licensing, standalone licensing, network licensing, subscription licensing, and pay-as-you-go or rental licensing.  Some of these are merely versions of another type or add caveats to other license types. 

Perpetual Licenses

The Perpetual License model is likely the most common software licensing type.  It has been the standard for decades.  A perpetual license means that you own the right to install your license of the software on one computer.  You are allowed to keep and use that version of the software perpetually—forever. This is easy for software companies to do because they consistently produce newer versions of the software they sell.  The new versions add new tools, change the user interface, fix bugs (in theory at least), improve performance, add new hardware compatibilities, and perhaps change workflows. 

If you don’t care about any of these things and you never update your hardware, then your one license is perpetually perfect.  Many users will not update to a newer license because they feel their version is fine.  It’s not broken (for them), so why fix it?  Why spend more money on new software and new hardware?  After all, the new software needs newer and more powerful hardware to drive it.  It’s an endless, vicious cycle. 

Standalone Licensing

Perpetual licenses are often standalone licenses.  That means your license allows you to install the software one time on one computer.  Some vendors allow users to install a standalone license on two computers.  The idea is that you may work in two physical locations—at the office and at home.  Perhaps you have a desktop workstation and a mobile laptop on which you need to access the software.  The caveat is that you can only use the software on one machine at a time.  That’s typically not an issue because you can only be in one place at a time.  As the name infers, this type of license stands alone, all by itself.

Network Licensing

A Network License allows users to install the software on several computers simultaneously, but they are only allowed to use it on one machine at a time.  This is often controlled by a network server that is running licensing software.  This software has to be managed and maintained.  These types of licenses are usually an additional cost to a standalone license.  It too is perpetual, but there is the need for a server to maintain the license.  This type of license allows multiple users to access the software for a short period of time.  Not everyone in your office will need CAD all day long, every day.  In fact, there may be several users that only need to access CAD for a few hours once a week.  It is very costly to purchase a license for each of those users, especially when they don’t need a full license.

Subscription Licensing

Autodesk and other software producers realized early on that they need to keep selling their products in order to make money.  The problem with CAD software is that is very expensive.  The problem is compounded with regular new releases of the software.  Autodesk and other software vendors have introduced subscription licensing.  A subscription license is an add-on to a perpetual license that lasts for a specified amount of time, typically a year.  The user pays an additional fee (subscription fee) when they purchase a perpetual license that grants them the rights to any new versions of the software during the subscription period.  Since the license is perpetual, the user can decide not to renew the subscription and simply keep using the last version received during the subscription time.  There is a risk involved because it is possible that the vendor will not release a new version of the software during the subscription time.

Pay-As-You-Go (Rental Licensing)

A newer type of licensing is starting to come to light.  It is Rental Licensing, or pay-as-you-go.  This license affords the user the right to use the software for a short period of time, usually one month or 30 days.  This licensing model is desirable for those who do not wish to release the capital required to purchase perpetual licenses. 

Rental plans are often less expensive. Users who only need the software for a short period of time do not have to pay full price, but only need to pay for the software when they need it.  Once the project is done, there is no need for the software.  Another feature of rental licensing plans is that you will always have access to the latest version.  This gives you an advantage over your competitors in that you have the latest tools, which should allow you to get more done in a more efficient way.

Which License Is Right for You?

You need to consider how many licenses you need.  How many users need the software all day long, every day?  Is this number expected to change much?  If not, then a perpetual license is likely what you need.  If this is the case, then consider a subscription.  The initial cost is the highest of all of the licensing types,  but over a period of several years it is actually the least expensive option. If your company has 10 full-time, all day CAD users and you do not plan on firing or hiring anyone over the next five years, then you are a perfect fit for this case.  It is especially true if your projects take years to complete.

On the other hand, if your projects are short term, lasting a few weeks or for a month or two, then perhaps you should look at the rental licensing plans.  There will be no large up-front payment as with the perpetual license.  Make a smaller, more manageable payment until the project ends.  This also allows you to more easily transfer the cost of the software to your clients.  If you often hire users for a project then release them, a pay-as-you-go plan will also fit your needs quite nicely. 

Conclusion

Our CAD tools are always changing.  The way we gained access to them has changed and it is going to change again.  The way we used CAD has changed.  We use to draw with a stylus or a puck on a tablet.  Now we typically use a mouse.  There have also been gesture-based input devices where you wave your hands in front of a sensor to control your computer.  Touch screen devices are becoming more commonly used in the design world.  What type of input will be next? 

The installation media we use has changed.  Now we don’t even have installation media—just a file we downloaded via the Internet.  The latest version or hotfix can be acquired almost instantly. 

Now how we purchase the software has changed.  We used to pay a large up-front fee, but now we can make regular installments on a subscription plan or on a rental plan.  What’s next?

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About the Authors

Brian Benton

Brian Benton

Brian Benton is a Senior Engineering Technician, CAD Service Provider, technical writer and blogger. He has more than 19 years of experience in various design fields (Mechanical, Structural, Civil, Survey, Marine, Environmental) and is well versed in many design software packages (CAD, GIS, Graphics). He is Cadalyst Magazine’s Tip Patroller and Infinite Skills AutoCAD training video author. Contact him at cad-a-blog.com.

 

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