Alibre $99 Price Offer Stuns the CAD Industry

"There’s a 'new normal' now where people are saving more, consuming less, and being more frugal and thoughtful in their purchases."

Mark Duke, Wal-Mart President and CEO

It may seem a bit unusual for a CAD company to quote the CEO of Wal-Mart, but these are unusual times and Alibre is no ordinary CAD company.

Our $99 offer caught the competition flatfooted and woke up a sleepy CAD industry dozing at the end of a long hot summer.

Customer and industry response has been incredible and the buzz has been extraordinary. All of the major CAD bloggers and several major CAD publications have picked up the story. It has been very interesting to see the CAD blogging community emerge and take on the dual roles of real-time news reporting and independent analysis.

Their headlines pretty much say it all:

Alibre's Ridiculous Offer - Scott Wertel's Harangue

Everything in the Entire World Marked Down to $99… Including Alibre Design – SolidSmack, Josh Mings

Alibre $99 Pricing Sends Shockwave – CAD Insider, Roopinder Tara

$99 for parametric 3D history-based CAD? Now that’s negotiating! – Dezignstuff, Matt Lombard

$99 Alibre Design Standard Opens the Era of Retail MCAD - Maybe - CADCAMNet, Randall Newton

Alibre Slashes Price by 90% - Desktop Engineering, Kenneth Wong

$99: Alibre Drives Down the Cost of MCAD (Temporarily) – WorldCAD Access, Ralph Grabowski

Alibre Design Standard for $99 – Deelip.com, Deelip Menezes
Alibre Makes $99 CAD Offer – Design News, Beth Stackpole

Alibre CEO, J. Paul Grayson, Discusses the New Pricing Structure – Novedge, Franco Folini

Alibre Cuts 3D CAD Price to $99 – Cadalyst Calls on Vendors to Clarify Overall Software Costs – Cadalyst, Nancy Spurling Johnson

Customers are expressing their appreciation by email, phone and with the ultimate compliment, a credit card purchase. As I write, we are scrambling to meet demand and the “Cha-ching” of $99 sales is echoing from our web store into my email inbox.

Many great companies and innovative designers bought in the last week. In many cases, they bought multiple seats or upgraded to Alibre Design Professional or Expert, and bought maintenance, training and other add-ons.

Most opinions are positive, but there is a smattering of negative reaction. The negatives comments seem to fall in three categories:

1. They are desperate; this is the last act before they go out of business.
2. They announced this without forethought, and their reseller partners are against it, because they can’t make money on it either.
3. This is nothing new, low-ball price offers have been tried and failed in the CAD industry before.

We anticipated that people would say that we were desperate. But seriously,  we honed our business model to be profitable giving away free software. How hard can it be for us to make money by charging for it? We are profitable; cash flow positive, debt-free and have been self-funded since 2001.

We started discussing the $99 offer concept about 90 days ago. We held internal discussions, including vigorous debate. Part of that debate included surveying our VAR’s; we have over 100, most of them outside of the United States. We have greater participation from our VAR’s for the $99 offer, than any special offer we ever made.

We are near, or at the bottom of the “Greatest Recession” since The Great Depression, which means that Alibre’s $99 offer comes at the time when it is most needed and the time that it is most appreciated. Customers and companies have become frugal, for the first time they pushing back against the exorbitant prices they have been paying for 3D CAD. 10’s of thousands of customers have delayed new seat purchases or let their maintenance contracts lapse. This may be the best time in the history of CAD software to make such an offer.

No one, least of all the big CAD companies, are publically defending their pricing or refuting Alibre’s ability to get the job done. I bet they are just keeping their mouth’s shut and hoping it goes away.

It would be interesting to be a fly on the wall at SolidWorks, Autodesk, or PTC’s headquarters. What are they thinking? What about the VAR’s? They must really hate this. I wonder how many have had deals killed when their prospects buy Alibre Design, saving them $3-5K PER SEAT in the process. At a minimum you can bet their prospects are demanding and receiving BIG discounts if they decide to stick with the incumbent.

There was a quote attributed to Bill Gates during the Desktop PC Software wars between Microsoft, Lotus, Wordperfect, and Borland. He was reported to say, “I count every application software dollar that we sell as being worth two dollars, the dollar that Microsoft gets and the dollar that Lotus doesn’t.” Using this math every $99 dollar sale we make is worth $5099 dollars, the $99 we get and the $5000 that the customer gets to keep.

Comments

[Scott Wertel]

Cha-ching

[electricman]

Been so Busy lately with too many projects - almost missed this deal! A lot less than the $595 I first paid back at Verison 6.0! Or was that the Price I missed - can't remember which now!)
http://www.aerocaps.info
http://www.aircraft-computational.com/alibre
http://myelectricfly.com

[Sigma Machine]

That really is a great deal on a good CAD design tool.