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Creative Suite Pricing Varies Throughout World

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Return to the May 8, 2007, creativeprose newsletter.

It’s easy to understand why Adobe’s costs of creating, marketing, and selling software in North America are lower than the costs of doing the same in, for example, the European Union. The North American version of Creative Suite 3 is available in English, French, and Spanish. In the EU, CS3 comes in 14 languages. The large, and largely homogenous, North American market means that Adobe can realize much greater economies of scale there than in the fragmented EU.

Higher costs of doing business translate into higher software prices, a reasonable cause and effect. However, some people are protesting that Adobe’s EU pricing is sky-high, shooting far beyond the higher costs of doing business there.

Swiss citizen Danielle Libine is leading the protest with a petition requesting fairer prices. Libine, who was a financial analyst before becoming a designer, has also published a 20-page article that goes deep into cost comparisons. Her numbers were startling to me; for instance, her research shows that CS3 upgrade prices in the EU can be as much as 102% higher than the North American upgrade price.

Adobe Responds
I asked Dave Burkett, the vice president of product management in the Creative Solutions Business Unit at Adobe, to respond to the criticism that its EU prices are unfairly high.

"We use two broad criteria to establish pricing in each local currency where we do business," Burkett told me. "The first is the historical cost of doing business in each region. Pricing varies widely. This is not unique to the software market; other markets, such as prescription drugs and automobiles, also have pricing that varies significantly between regions. In the software industry, it comes down to the degree in which a market is homogenous and how companies can establish economy of scale.

"The European Union is not one big market," Burkett continued. "There are four major currencies with very diverse business channels, and each market has very different channels aligned to the ways customers prefer to buy software and engage with the distribution channels.

"The EU is fragmented by region and smaller retailers," said Burkett. "For example, Adobe has four times as many field market people as we do in the US per dollar of revenue we generate. We also have 46% higher variable marketing costs than in North America. That includes ad campaigns, marketing seminars, facility rentals, etc. We also compensate the distribution channel and that costs about 25% more per dollar of revenue in the EU than in the US. Language localization also costs us more, of course. And it costs five times as much to manufacture and maintain inventory in the EU than in the US."

Burkett said that the second criterion Adobe uses to establish pricing is "market research that establishes the value customers place on the products"; in other words, what the market will bear.

"We do testing in each region and get feedback from customers," Burkett explained. "We have not found that the value fluctuates much over the years. The value associated with CS3 is incredible, and customers react to that. What I’ve been hearing from customers is that they see the value and appreciate it."

I asked Burkett whether prices between regions are the same, once you take into account average exchange rates. "There are large differences between regions aside from exchange rates," he replied. "Many companies have established pricing in local currencies. Relative to the region, our pricing stays the same. Other than the adjustments we make with each new release, the value customers would perceive would be consistent over the entire period, even though the exchange rate could have changed significantly.

"You can lock to the dollar or the euro," he continued. "We’ve chosen to lock to the euro. We don’t take into account the currency per se when we’re determining the value of the products in the local market."

In her article, Libine also looks at EU/US pricing differences for software from Apple, Avid, Corel, and Quark. Her research shows that those companies’ pricing differences are less pronounced than Adobe’s differences. When I mentioned this, Burkett said, "I can’t comment on how other companies come to their pricing. I can really just talk about ours in particular. We establish pricing in each of the regions based on what we’ve seen historically and the value of the product."

Finally, I asked Burkett whether he had seen Libine’s petition. After a short pause, he said, "We’re aware of it.
Many of us at Adobe are very close to our customers. That said, we have an established policy in how we do business in Europe. It’s difficult to figure out how to reconcile those two extremes. I feel like in many ways the situation isn’t unique to this release or this period in history or even to software in general. Many categories of products have had this issue come up.

"We’re aware that this is a sensitive issue," Burkett went on, "and we’re continuing to monitor and talk with our customers to determine if there’s anything different we should be doing going forward. We’ve traditionally set our pricing with each product cycle and not varied it within the cycle. The process of establishing pricing is rigorous; we go through extensive market research. We believe we have the approach that makes the most sense for us. Establish pricing and stick with it."

Resources
If you’re interested in reading more about this issue, check out the following URLs:
– "Adobe CS3 Costs 1,000 Pounds More in UK"; ZDNet UK
– "Is Adobe Ripping Off UK Customers?"; Macworld UK blog
– "Photographers Take Stand Against Adobe"; The British Journal of Photography
– "Adobe Pricing in the EU"; Danielle Libine’s aforementioned article

If you know of any other resources that shed light on the pricing issue, please share them by posting in the Vox Box to the left of this article. If you’re not already a member of creativepro.com, you have to register before you can post, but registration is free.

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Posted on: May 7, 2007

Terri Stone

23 Comments on Creative Suite Pricing Varies Throughout World

  1. Quark’s predilction for treating their customers with contempt is what enabled Adobe to get InDesign off the ground. Adobe should remember that we now have a choice. To charge UK customers double what US customers pay does not encourage customer loyalty.

  2. For educators and their students, even the education price is too high for most — even in the US

  3. Adobe is definitely trying it on in Europe, especially in the UK. I can’t imagine what kind of “localisation costs” the company thinks it incurs in selling CS3 to the British. However, I defend Adobe’s right to charge as high a price as it thinks we’ll pay for it. From this article, I suspect that Adobe would rather Europe didn’t buy any copies anyway. We sound like a massive burden to the company.

  4. I think Adobe is aggressively digging their own grave. Besides AE they’re pretty much irrelevant in the professional video space, I doubt the little toy additions in Photoshop will change that.

    With the current course and how they hate their customers and spy on them actively I give Adobe about 10 years till it’s over.

  5. I don`t agree with a fact that only feature for slovenian (2 mio people) market is worth 100 % higher price for CS2 suite, that is hypenation in InDesign. On the other hand the US user of same suite competes on 250 mio people market. Saddly, the same thing goes for the prices of Apple hardware. Dollars are changed to Euros by ratio 1:1 and on this price I must pay another 30% for provisions to official seller.

  6. Terri: Your interview had the clue that even you missed. Terry stated to you “We also compensate the distribution channel and that costs about 25% more per dollar of revenue in the EU than in the US” That is where reality costs come in. Another was “And it costs five times as much to manufacture and maintain inventory in the EU than in the US.” The resellers in the EU historically mark up the price a lot more. Canon sees a 150% mark up on their software. I have seen that, especially in Switzerland. There are other methods of getting US software to friends and relatives in the EU. We do it a lot. Adobe does not penalize for that.
    Regards,
    Rick Redfern
    714.840.4737
    125 words

  7. There’s always been lot of snobbery about software and operating systems – apple’s current negative campaign against PCs plays us for the suckers we are. But there will come the day when if you’re not running Linux with the Gimp, Scribus and Inkscape you’re just not serious.

  8. If you think EU prices are unfair, then take a look at what Adobe Australia charges. We don’t have the multiple language choices that Adobe cites as a reason to charge higher for the EU. We have International English only.
    Here’s a comparison, and all prices have been converted to US dollars
    Australia -Photoshop CS3 Buy outright = $955
    US = $649
    a $306 difference

    Aust Upgrade PS3 = $293
    US Upgrade = $199
    a difference of $94.00

    Aust Buy CS3 Suite Design Premium = $2,652.00
    US = $1,799.00
    $853 difference

    Aust upgrade CS3 Design Suite Premium = $881.00
    US = $599.00.
    A $282.00 difference

    Are we being ripped off by Adobe Australia? You bet we are!

  9. Adobe’s point of view isn’t completely true. I live in Norway. A small country with 4 million inhabitants. The suite is not localized, but some products (like ID) are, but have to be bought separately if we want the localized version.
    Adobe has two people working in Norway. One of them works exclusively with Acrobat. The other one works with creative software.
    A full Design Premium will cost me the equivalent of 3.500 USD (incl taxes). It would actually be cheaper for me to go to New York, stay at a fancy hotel and buy CS3 there than to buy it directly from Adobe locally. Go figure. There is no valid reason for this pricing

  10. Australia speaks English, is a single market, and there are no additional research or marketing costs as most material is just straight sourced from the USA.

    We may be metric and favor English spelling but the first is a given and the second largely ignored by Adobe.

    The reason they charge like a wounded bull is because our government has given them greater powers to do so than in the States. They are rapidly becoming the Microsoft of DTP as they power Quark out of their previous dominance and now have Macromedia in their clutches as well.

  11. Adobe’s argument that support is more expensive in Europe because of the multitude of languages is bogus. I can’t get phone support here in the US without devoting many hours on the phone. Sometimes I can’t get a response to a call after waiting for over two hours!

  12. I think this is a case of American dominance of the market and the rest of the world can subsidise US users…aca Microsoft!

  13. And I thought US prices were crazy. If only I was a student or teacher I could buy a complete education version for about one third the cost. My niece, a student, was able to buy CS2 for $375.00. I had to pay $1300.00 as a professional! Give me a break! Adobe is screwing the very people who got them where they are.

  14. Adobe’s argument for higher costs due to higher business costs might be correct. There are indeed additional translating and marketing costs for a foreign language version. But if a European resident wishes to purchase the U.S. English edition (either purchasing it in the U.S. or via Amazon.com etc.), then Adobe should support the software, which includes activation. I was told by Adobe’s hotline during a visit to the U.S. that if I purchased a U.S. version that I would not have any support nor would I be able to activate the software. Pretty weak for an international company.

  15. I think it is crazy to have spent as much money as I did for CS2 and then find out that I need to spend another $400 for CS3. Also, if students can get the entire suite for less than $400, what about us self-employed professionals who are struggling to run a business – can we get a break? Adobe knows that we cannot live without the software, so we are sort of over a barrel.

  16. I feel sorry for those who have to pay those higher prices — and I thought the US prices were disgustingly high!

    For me, there is not enough that’s new and exciting about CS3 to warrant an upgrade. I’ll see what CS4 brings.

  17. I´ve read the article by Danielle Libine and it seems she forgot there´s a whole continent between USA, Africa, Asia and Antarctica: Latin America. I understand that she took the data from Mark Garrett presentation but she could´ve done her homeworks better and try to find out what happens in this part of the world. And what about Brazil? It has a market of hundred of millions. It seems that a whole continent (it includes South and Central America doesn´t matter for both Adobe and this so called “petitioner”.

  18. As meaksnow said, I can admit Burkett is right when he says translations etc etc etc are the reason why EU pricers are higher then USA ones, but when I try to buy an upgrade version – or a complete one, it doesn’t matter – of CS3 and I choose the downloadable English (and I say ENGLISH) version, why I have to pay more then in USA if I’m in Italy?!?!?!
    Burkett says that they decided CS3 prices not taking into account the currency. Now he should make me understand why 599$ for a CS3 Design Premium upgrade in USA become 1763,57 Euro (ex VAT) and not at least 599 Euro ex VAT (it should be this way if you don’t take into account currency…).
    So the truth is that Adobe is trying to make more money from UE professionals then from USA ones. If I’m buying an English downloadable version of a software I want to pay the same USA price because Adobe is not going to spend more money for me then for an USA designer: no translation, no shipment…
    Sorry, but I’m not going to upgrade my CS suite because I don’t want to spend 1700 Euro + VAT instead of 599 $. I would spend 599 Euro + VAT, but not 1700.
    I can’t imagine a world where every USA downloadable software is 300% more expensive in the rest of the world, even if you download it in English directly from their servers…

  19. I have been chasing Adobe in the UK on this pricing issue. Their arguments suck. If production is an issue why is the CD/manual Boxed version £16 cheaper than the download? As for production cost – what production cost is there to a download that was designed and written in the US? They haven’t even changed the spelling to UK dictionary!

    Perhaps they should review their reseller contracts. None of the US resellers can sell outside of their own country. This stinks as bad as a cartel on a price fixing mission. I am contacting the various consumer associations and national press with all of the information found to date.

    What farce!
    David

  20. OK – my email to the European PR dept brought me a telephone from Dave Burkett. I pretty much got the identical response outlined in the interview above. Part of my argument is that when Adobe do their market research it is likely to be with larger companies, multiple licenses, bigger budgets and less likely to include sole traders. The point is that any product can be established as great value for money – until you find somebody who can buy it at half the price you can! Mr Burkett had no answer for that. I explained that it was impossible to buy from US resellers as several of them highlighted that they “cannot supply international customers as it goes against their agreement with Adobe”. This is blatant price fixing and I am now going to take my complaint to the national press, consumer associations and I will even see if the Office of Fair Trading can be stirred from their slumber! I will be liaising with others to see just how much pressure can be brought to bear on this monopolistic and greedy manufacturer. If you want to help then please email me at david@adobepricing.com

  21. Adobe’s argument that support is more expensive in Europe because of the multitude of languages is bogus. I can’t muhabbet get phone support here in the US without devoting many hours on the phone. Sometimes I can’t get a response to a call after waiting for over two hours!

  22. I feel sorry for those who have to pay those higher sohbet prices — and I thought the US prices were disgustingly high!

  23. I am just one home computer dinvidvidual and you say one thing one day (Its Free) and you charge me $29.95 mand cut off the system I had used for several years…..and then, I think that its only going to be $29.95 for a year…….I donot trust you more I read about Adobe….I show an interest in the ‘FREE’ use of ADOBE FLASH PLAYER and find my self with a $29.95 charge and have 3 o4 additions of ADOBE forced upon me…..Is this fair and honest.?????of course trying to UNINSTALL is meant to be as dishonest as anything else with Adobe…

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