Unified Pricing Across Product Lines:Detail or Driver?

Erik LarsonDirector of Product Management and Marketing

Macromedia

Handhelds (19m WW)

Cell Phones(1b WW)

Consumers

1 billion Mobile andDevice Users

68 million

BusinessCommunicators

Presenters & Publishers (35.3m)

Meeting & Training Participants (30m)

Subject Matter Experts (2.4m)

Business Users

5 million

CreativePros

Graphic Designers(2.7m)

Web Developers(1.8m)

Multimedia (0.5m)

8 million

Pro Developers

3G Coding(4.7m)

Scripters (1.3m)

G4 (2.3m)

Designers & Developers

*WW seat estimates

Sources: Gartner, IDC, MetaFacts, Macromedia Market Research

Macromedia Target Markets

Macromedia Pricing Models

Offerings• Tools, Suites, Servers, Installed Solutions, Hosted Solutions

Models• Per PC, Per CPU, Per Named User, Per Concurrent User, Capacity• Perpetual, Subscription, Maintenance• 12, 24, 36 months

Programs• Commercial, Education, Government, Non-Profit, Japan, Europe

Channels• Direct, Disti-Reseller, Reseller, Online-Store

Pricing Drivers

• Customer Desire

• Business Model

• Business Strategy

Source: IDC, April 2003, N=280, Quicklook Licensing Study, April 2003

Allows me to pay for what I use

Allows me to pay for the value I derive

Includes large up-front fee plus recurring fee

Evenly distributes costs over time

0 200 400 600 800 1000 1200 1400

PLEASE RANK THE FOLLOWING SOFTWARE PRICING MODELS IN ORDER OF ATTRACTIVENESS.

Unify Pricing and Business Model

Consumer $0 $200

Pro Tool $200 $2,000

Dev Server $1,000 $20,000

Departmental $15,000 $50,000

Enterprise $50,000

Consumer Mos to YearsValue AddResellers Wks to Mos

Death to Line Extensions – Consolidate and Dominate

Dreamweaver $299 + UltraDev $599 = ???

• Business Performance – Strong

• Competitive Landscape – On the Verge

• Business Strategy – Dominate

• Decision –

Results

Death to Line Extensions – Consolidate and Dominate

Dreamweaver $299 + UltraDev $599 = ???

• Business Performance – Strong

• Competitive Landscape – On the Verge

• Business Strategy – Dominate

• Decision – Dreamweaver MX $399

Results

Long Live Line Extensions – Go Pro When You’re Already There

Flash $399 = Flash $399 + ???

• Business Performance – Dominant and Steady

• Competitive Landscape – Empty

• Business Strategy – Extend and Grow

• Decision –

Results

Long Live Line Extensions – Go Pro When You’re Already There

Flash $399 = Flash $399 + ???

• Business Performance – Dominant and Steady

• Competitive Landscape – Empty

• Business Strategy – Extend and Grow

• Decision – Flash Professional $699

Results

Where Bundles Work – Suites to Raise Share of Wallet

4 Separate Products for $1,596 = ???

• Business Performance – Strong

• Competitive Landscape – On the Verge

• Business Strategy – Dominate

• Decision –

Results

Where Bundles Work – Suites to Raise Share of Wallet

4 Separate Products for $1,596 = ???

• Business Performance – Strong

• Competitive Landscape – On the Verge

• Business Strategy – Dominate

• Decision – Studio MX $799

Results

Where Bundles Don’t – Tag-Alongs Don’t Grow Share

Studio + Contribute = ???

• Business Performance – New Product

• Competitive Landscape – Established and Crowded

• Business Strategy – Enter and Grow

• Decision –

Results

Where Bundles Don’t – Tag-Alongs Don’t Grow Share

Studio + Contribute = ???

• Business Performance – New Product

• Competitive Landscape – Established and Crowded

• Business Strategy – Enter and Grow

• Decision – Studio Plus with No Price Increase

Results

Buy Low – Going Low to Enter and Grow

Contribute v1.0 = ???

• Business Performance – New Product

• Competitive Landscape – Established and CrowdedPer User Discrepancy: Interwoven for $250K or FrontPage for $189

• Business Strategy – Enter and Grow

• Decision –

Results

Contribute Pricing Data (Per User)

$79 $99 $129 $149 $179 $199

RevenueUnits

Buy Low – Going Low to Enter and Grow

Contribute v1.0 = ???

• Business Performance – New Product

• Competitive Landscape – Established and Crowded

• Business Strategy – Enter and Grow

• Decision – $99 per seat

Results

Unify Pricing and Business Model

Consumer $0 $200

Pro Tool $200 $2,000

Dev Server $1,000 $20,000

Departmental $15,000 $50,000

Enterprise $50,000

Consumer Mos to YearsValue AddResellers Wks to Mos

Sell High – Pricing to Enter and Expand

Contribute + Enterprise = ???

• Business Performance – Existing Product, New Market

• Competitive Landscape – Established and CrowdedPer User Discrepancy: Interwoven for $25K or FrontPage for $189

• Business Strategy – Enter and Grow

• Decision – Web Publishing System$229 per seat$2,499 starter pack$50K + site license

Results

Sell High – Pricing to Enter and Expand

Contribute + Enterprise = ???

• Business Performance – Existing Product, New Market

• Competitive Landscape – Established and CrowdedPer User Discrepancy: Interwoven for $25K or FrontPage for $189

• Business Strategy – Enter and Grow

• Decision – Web Publishing System$229 per seat$2,499 starter pack$50K + site license

Results

Unify Pricing and Business Model

Consumer $0 $200

Pro Tool $200 $2,000

Dev Server $1,000 $20,000

Departmental $15,000 $50,000

Enterprise $50,000

Consumer Mos to YearsValue AddResellers Wks to Mos

Summary

• Price to Customer Desire

• Price to Business Model

• Price to Business Strategy