Today’s Obsession: Money

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I’m sure that, by now, most of you have heard that Adobe has released Creative Suite 5.5, and that it’s a point upgrade—not CS6. But there are some not insignificant features to be discussed there.

Rather than looking at the technology (which I’ll get to later this week) I’d like to talk about the upcoming subscription model and how that’s going to affect your pricing as you move forward, because it’s causing some ire around the web.

For most of us, it won’t. The subscription model is specifically for smaller practitioners who need to be able to incur smaller monthly charges, rather than making a larger outlay of cash at once.

This means you can subscribe to CS for about the same price every month as your iPhone bill. For younger designers or smaller studios, that’s really cool. For Adobe, it creates a recurring revenue stream allowing them to stop relying on a large revenue dump every eighteen months, as currently happens.

This is a change that’s happening in most software development communities—most visibly on the web. HTML (formerly HTML5) is now considered a “living standard” without a release cycle. As new things get added, they’re rolled out. Browsers are also doing it—Chrome updates every six weeks, and Firefox 4 is moving in the same direction.

The difference here is that the Adobe plan is a subscription, not a release of continuing upgrades. It’s another way to access and pay for the software, rather than a way to get access to incremental updates.

Now, if you’re a larger studio, it’s to your advantage to continue buying your software every two years (assuming the pricing does actually stay the same as it is now).

Subscribing to CS Design Premium (assuming the purchaser’s never bought before) costs $1140 for a year with a year-long commitment and $1668 for a year on the month-to-month plan. Assuming you’ve never bought a box upgrade before CS 5.5, that would cost $1,899.

The massive price differences actually only happen if you jump from a box edition to paying on a subscription basis—then (assuming box price upgrades stay the same price) you’ll be looking at a not-insignificant hemorrhaging of cash in your first year of service.

My hunch is that Adobe is looking for ways to make a revenue stream from students and other audiences who need CS, but would ordinarily have access to it by stealing it. It opens a market segment they’ve never had access to before. If you’re part of that new market, then you have an opportunity in front of you. If you’re a studio who would rather buy the box upgrade, then this doesn’t affect you, and you should ignore it.

What I’d love to see would be lowered box prices as their revenue stops being so reliant upon that upgrade charge every 18 months. I doubt that will happen.

for a complete rollup of how pricing works, look to this chart on Adobe’s site.