Alibre for $99 - Is it Sustainable?

Established vendors will surely say $99 for full MCAD software is NOT sustainable. But I think what they are really saying is that $99 pricing is not sustainable given their own present business model. I am not privy to Alibre's inner workings, but I know from experience with other software companyies that high volume sales at low prices is very much a sustainable business.

Given that each additional Alibre CD will cost a couple of bucks to create and ship, $99 could actually generate a huge profit margin on each additional sale. Online distribution will be better yet. Yeah, yeah, I'm not including R&D, support, marketing, overhead, and so on....so let's call this short-term profit.

In the best case scenario, let's say this creates thousands of additional users. Not only does this create plenty of short term profit but creates a potential for Alibre's premium products and support. If you sign up for the $99 software, you will then encounter an invitation for various "upgrades."

You can get Alibre Design for a bargain basement price of $99 but not before you get an opportunity to "upgrade."

I doubt this will touch off a round of price cuts in the industry, primarily because Alibre just is not that big a player at the moment to affect the market. This is not like the airlines, when one carries offers a $99 coast to coast flight and others rush to follow suit. The airlines are in a hotly contested market with evenly matched contestants -- which is hardly the case in the software business.

So what will the execs at Autodesk and SolidWorks do. Even those who even admit to Alibre being competition will probably do nothing. Didn't Alibre do a similar stunt before with free software? [Alibre did offer Design Xpress for free, though at the time of this writing it was not found on the Alibre site]. Whatever happened with that? It wasn't like Alibre set the world on fire. If I were a software exec, I'd sit tight, business as usual. Not till I start losing a boatload of sales to Alibre do I need to do anything. 

Comments

[rtara]

Thanks, Ralph. Alibre appears to be going underground with its free product, Alibre Xpress, removing just about any mention from the corporate site. However, a quick search on Google and I see it's available on several download sites, including download.com and tucows.

[Debankan Chattopadhyay]

I agree that Alibre's competitors will not lose sleep over this. Not yet. Price alone can never be a game changer, not in CAD. There's a lot of old baggage (compatibility, data exchange,...) to deal with.

If anything at all, Alibre's competitors can feel envious of the "webshare" that it has garnered since the announcement. I think everyone and Santa Claus has had something to say about this $99 offer! I think its time we let go of this topic and move on to something else. Else, other companies will think this a good way of "spreading the word" and come up with ridiculous offers. Earlier today, I read on Deelip.com about IntelliCAD now for $65!! Where will this end?

[ralphg]

Alibre Xpress is still available in disguised form: download a demo of Design, and after 30 days it reverts to Xpress.