Over the years there has been infrequent but ongoing discussion about ColdFusion pricing. Some feel that the price is too high and that lowering it would increase product use. Others believe that the product has been priced far too low, and that raising it would increase respect among analysts and industry experts. Some want it given away, free or open source. Others have asked for changing versioning, and including a free option. There are lots of suggestions, and lots of opinions. And contrary to what some seem to believe, we actually do spend a considerable amount of time trying to figure all of this out.
I have my own opinions on the subject, but am not going to share them here. Rather, because this subject has come up again recently (along with the assertion that the ColdFusion product team just does not get it and is making all sorts of terrible mistakes), I thought I’d share with you some of the debate and thinking that goes into this discussion.
Creating software is expensive. Companies spend hundreds of thousands of dollars, often many millions of dollars, creating and maintaining software products. So what would possess a company to take all of that time, effort, and money, and slash the price or just give it all away?
There are lots of reasons for doing so, and a long list of companies and products who have indeed done so (with varying degrees of success). But in general, the decision to give away a product falls into one of three categories:
- A company may become uninterested in continuing to create or maintain a product. This may be because of changes in company strategy and direction, or it may be because of market changes and evolution, or it may be because the product was failing, or it may be because the product had simply outlived its usefulness. There are lots of reasons and motivations. But, at the end of the day, if a company is no longer interested in marketing a product, they may opt to just give it away (or perhaps open source it) as opposed to just dropping support for it. Doing so can help the company save face, and perhaps the product could actually thrive and be granted a new lease on life (although history has shown that in reality this seldom works). A perfect (or perhaps imperfect) example of this is Allaire Spectra, a product that started off life with one set of goals, but which then morphed into a product that was poorly positioned, terribly misunderstood, and not overly successful. When Macromedia acquired Allaire the entire product line was scrutinized, and Spectra was dropped as a product. But, there were (and still are) some customers using Spectra, and so rather than just abandon the product, Macromedia open sourced it (and then promptly totally ignored it).
- Sometimes company and product strategy necessitates product realignment, and that often includes positioning and pricing changes. At times this is planned, other times this is in reaction to market and trend changes. Product pricing is a tough balancing act, underpricing a product can be as damaging to the product as overpricing, and so companies constantly revisit and refine pricing decisions. A great example of this is Flex which was originally created as a server and priced accordingly. And then Flex 2 was reinvented as a compiler, with supporting tooling and an optional server, and pricing and packaging changed accordingly. And pricing has been tweaked some more since then. Flex 1 was targeted at a few large organizations, and the pricing and packaging reflected that. Flex 2 became a developer centric product, targeted at the masses, and so the revised pricing and packaging changed to reflect this new strategy. Whether the original Flex strategy was correct or not can be freely debated, but is rather irrelevant. What is more relevant is that the product team made the changes that they thought necessary, changes that appear to have been exactly what was required.
- And sometimes pricing decisions are less driven by the product itself, and more by some larger consideration. Does anyone remember Allaire ColdFusion Studio? Many do, and many still use that product. But what many don’t know is that product never made money. So why was it created and sold? Because it helped sell ColdFusion. The tool was a loss-leader, sold at a loss to help drive greater revenues in total. In the case of ColdFusion Studio, financial success of the primary product drove pricing considerations pertaining to a lesser value supporting product. Another example is BlazeDS. Previously Flash Remoting had been sold or included in other commercial products. But increased used of Flash Remoting is critical to the ongoing success of Flash as a platform, and so Flash Remoting and core messaging functionality was open sourced as BlazeDS. Here previously sold software is being given away to better solidify the core platform. And open sourcing the codebase has an additional benefit in that it helps developers better understand communication internals, and may also help in porting the code to support other back-ends. Similarly, the decision to open source Flex SDK but to charge for tooling represents a strategic decision that dictated packaging and pricing thinking. In other words, pricing can sometimes be driven by high-level strategic thinking, including completely rethinking revenue generation models.
So, everything from company direction to market trends to product strategy and more all can, and do, impact product pricing and pricing changes.
(And before I get accused of open source bashing, let me make it quite clear that I am not talking about projects or products that start life as community or open source initiatives. Those have a very different motivation, a very different life cycle, and a very different definition of success. Both open source software and commercial software have their place and legitimacy. There is value in both, and I respect the right of developer communities to build and manage their own destinies as much as respect the right for commercial software vendors to profit from their endeavors. My comments here are not about open source itself or the open source movement. What this is about is making the shift, transitioning from commercially sold product to unpaid or dramatically reduced product, including becoming open source.)
Now back to ColdFusion. Do any of the pricing motivations enumerated above apply to ColdFusion? Let’s see.
ColdFusion remains a critical product, and is a core component of Adobe’s development and RIA platforms. In fact, Adobe has demonstrated a far greater commitment to ColdFusion than Macromedia ever did! No abandonment at all here. So the first category does not apply.
But what about strategic pricing changes? Do current trends or market situations warrant price changes, either up or down? Is there a strategy change that is needed that could help the state of the business? Adobe has strict policies that prohibit the sharing of actual product specific numbers. But we have stated repeatedly that the ColdFusion numbers are really good. And former Adobe CEO, Bruce Chizen, was quoted in an interview as saying that the ColdFusion numbers are the best they’ve been since Adobe took over the product. When product sales remain solid and predictable and reliable, then pricing changes are extremely risky, and must only be considered if there is overwhelming evidence that doing so would improve the business, and not hurt it. This involves determining perhaps, as an example, whether a 50% drop in product price would result in a 100% increase in product sold, which is what would be required to match existing revenue. And both priced drops and increases must be scrutinized. Sometimes the market and environment preclude pricing changes even when they might be necessitated. As an example, ColdFusion MX cost us more to build than any other version of ColdFusion to date, but we did not raise the price then (even though we truly needed to) because the market and environment would not have tolerated the change. It works both ways. But at the end of the day, particularly in regards to lowering prices, if a product is not selling well, then pricing changes become more appealing. But ColdFusion remains a highly successful product, and so while all strategic and growth options are up for consideration, there really is not an overwhelming necessity to immediately slash ColdFusion pricing.
Which brings us to the third category, changing pricing models or high-level strategy. For example, one suggestion that has come up occasionally is to give away ColdFusion and sell an IDE. This is a compelling idea, but one that thus far has been impossible to cost justify. Assuming that a tool would sell for a 10th of the price of ColdFusion Professional (and perhaps a 50th of the price of ColdFusion Enterprise), we’d need to sell a massive number of tools to not massively harm revenue. And our research (yes, we do research this thoroughly and extensively) does not in any way suggest that this could work. At least not now. Is it an option in the future? Perhaps. As already noted, market and environment changes can absolutely impact product pricing decisions and options.
There are no shortage of options. Do we create a free entry level version of ColdFusion, and if so what would the impact on the business be (both positive and negative)? What about giving away ColdFusion Professional and making up for the revenue shortfall by raising the price of ColdFusion Enterprise? Should we do away with those two editions and create one that is priced somewhere in the middle? What about giving copies away free for education (as Flex Builder does), what would be the revenue implications of such a decision? Should the product be open sourced, and if so how would revenue be generated to be able to sustain a development team? What about the cost of the OEM technologies in ColdFusion, can they be removed to lower the cost while still maintaining product value? Can that tooling strategy be made to work? What can we do for ISVs who want to build products on top of ColdFusion, what can we do to make them successful? Lots of options. And few are inherently right or wrong, they all have pros and cons and these must be evaluated and debated clearly and unemotionally, while keeping the state of the business in mind.
And yes, I did say while keeping the business in mind. For those of us who’ve been involved in ColdFusion since the early days, there is a lot of history and emotion and passion involved. And that’s wonderful, it’s what makes the ColdFusion community such a, well, community. And part of my job has always been to create and support that community. But at the end of the day, the domain name is adobe.com, not adobe.org. And at the risk of sounding like a pro-business capitalist pig, the other part of my job is to ensure that the ColdFusion business is a healthy one. Because if it were not so, we’d not be having this discussion at all.
No shortage of opinions. And you are free to share your opinions too. But keep these facts in mind …
It costs a lot of money to create and maintain ColdFusion. Slashing product generated revenue, or giving the product away, would likely mean that we’d not be able to afford to pay a team to build new features. Could the community take over? Perhaps, and that has to be part of any discussion.
There are individuals who are very price conscious, for whom ColdFusion’s price point becomes a real obstacle. But these individuals are a minority. Truly. Talk to our sales reps, those who actually sell ColdFusion every day, and they’ll tell you that price is just not an issue. They don’t lose sales over price, not anymore (ironically, it was more of an issue years ago). For what it’s worth, the biggest issue is when some CTO or outside “expert” mandates some new policy or decision that excludes ColdFusion. I am not dismissing those who find the price prohibitive, but they truly are the minority. And the proof of that is, as already stated, that ColdFusion is selling really well.
Having said that, there are indeed smaller organization, or contract developers who worry about the costs they pass on to their clients, who do worry more about initial cost (as opposed to total ongoing cost). Many of these are the ones advocating that we give ColdFusion away for free. Although when I ask them if they give away the work they do that is built on ColdFusion, my question is usually met with an incredulous glare. Still, we do need to accommodate these individuals. Which is why we do have the less expensive edition, and which is why we made sure that per CPU pricing allows multiple cores and multiple virtual machines, and why we’ve been providing hosting companies with very aggressive pricing options so that they can afford to offer ColdFusion at competitive prices. Although, one hosting company recently told me that even if we cut their prices they’d still charge more for ColdFusion than they do other options because they have found that they can indeed charge more and that ColdFusion customers will pay more. It’s the free market at work.
The bottom line is that all options are on the table and always are. We make price changes when appropriate, both up and down. What made sense in the past may or may not make sense in the future. And we constantly reevaluate the options available to us. And as we work our way towards “Centaur”, you can be sure that we’re having this debate all over again.