Here is the detailed price comparison between CS and CC that I talked about:
Myth Buster: Subscriptions to Creative Cloud are cheaper than perpetual licenses
All the price comparisons between perpetual licenses and Creative Cloud subscriptions I have found on the Adobe pages, on various blogs, on the NAPP pages, and even on CNET face two major errors. The first error is that they all compare the prices for the Creative Cloud with the mere price of a CS6 perpetual full license, but don’t take into account that a perpetual license has a value that existing customer already have paid for. The customer either has the right to use the product indefinitely or has the monetary value if he/she decides to sell it. This value of a perpetual license can’t be left out. It changes the picture completely.
The second mistake is to compare only a single product like Photoshop or the Master Suite with the Creative Cloud subscription models. Before Creative Cloud became the only option to get the current products customers were able to buy a Standard, a Design & Web, or a Production Suite. Those subsets of the Master product line were between $700 and $1300 cheaper than CS Master Collection. All those customers need to purchase Creative Cloud Standard now. I will look at those enormous costs increases later in this article.
When you compare perpetual licenses to the Creative Cloud subscription model you can think of the Creative Cloud as a perpetual license that the customer will always update to the newest version and when he/she doesn’t want to use it anymore sells it to market price. This equals the loss of the Creative Cloud software once the subscription is not renewed. To compare the costs of each sales model you need to differentiate between existing customers and new customers.
Let’s address existing customers first and take a look at the update prices for master versions of the Creative Suite in the past years.
# months upg pice Upgrade to version price / month
25 $1,400 to CS 3 Design + CS3 Production 56
18 $1,200 to CS 4 Master 66.67
19 $900 to CS 5 Master 47.37
12 $549 to CS 5.5 Master 45.75
13 $525 to CS 6 Master 40.38
If you divide the price by the duration of each version you can calculate a monthly price that you can compare to the monthly subscription fee of the Creative Cloud. In general you can see that the monthly price went constantly down in the last years. Starting with Creative Cloud the cost are 25% up again. Yes, you will get some more software. Many people might not need it, but they still have to pay for it.
Since Creative Cloud is not an upgrade to Creative Suite (CS), existing CS customers can receive the promo discount, but still own their old CS license. If they want to keep their old license to have a back-up in case they won’t continue their Creative Cloud subscription, their CS license will lose value with each update of Creative Cloud. So let’s estimate that a CS6 master license of today will be worth less than $500 in 5 years. (If many customers abandon Adobe it will be worth less, because the supply will be bigger). This means you have to bear an additional loss of at least $2,000 and customers pretty much lose their investment in their previous versions. Spreading this over the time of 5 years means that existing CS6 master customers actually pay about $33 more per month, resulting in a monthly price for Creative Cloud of about $85 (plus tax) and a 100% price increase comparing to a perpetual license when buying all upgrades!
The promo discount you receive as an existing CS6 master customer is only $360. Since you already pay $200 more per year compared to the previous updates you only save $160, but don’t have a perpetual license for the new CC.
So let’s look at existing customers that purchased a Standard, a Design & Web or a Production Suite. Those subsets of the Master product line were between $700 and $1300 cheaper than CS Master Collection. All what has been said about Creative Suite customers before is true, too. Additionally those customers now only have the option to subscribe to the Creative Cloud Standard. The upgrade costs from version 5.5 to version 6 have been, depending on the suite, between $275 and $375. The price for Creative Cloud Standard is $600 per year. So those customers have to pay now about twice as much compared to their perpetual licenses. This is ridiculous. Yes, they will get more software, but apparently they didn’t need it before or they would have bought a CS Master Collection already. For sure they don’t want to pay for what they don’t need.
The conclusion is that existing customers that would have upgraded to every new version are facing an increase in costs of 100% to 200%, which is two or three times as much as they paid before. (The value loss of their existing perpetual license was calculated over a span of 5 years). Especially customers that were using one of the special suites face the biggest increase of costs.
Until last year customers were further able to skip one or more upgrades without major penalties. So another problem with Creative Cloud has been that customers can’t decide not to buy an upgrade anymore. To make the Creative Cloud not look so bad Adobe changed its upgrade policy and allowed upgrades only from one full version back. This meant that existing customers were forced to upgrade or they lost their investment. Even when they skipped a mid-cycle release the price to the next full version is pretty much the same as if they would have purchased both updates immediately. So already for the last two years Adobe’s price policy reflects a constant payment system or a hefty penalty (you need to buy a new full version).
Despite the suppressed pricing policy customers were able to decide to stick with their actual version and use their investment for a longer time. With Creative Cloud this becomes worth. Customers even need an active subscription just to work with their files. They are damned to keep paying for each coming upgrade if they need it or not. Maybe they have no need for an upgrade or just can’t afford it, or don’t create new business anymore. In any case they can’t use their investment like with a perpetual license for a longer time. With the old perpetual licenses, before Adobe changed its pricing policy, skipping each second upgrade would result in 40% to 50% of savings. To make sense for customers that normally didn’t purchase every update the subscription model would need to be cheaper than the price of a perpetual license plus the updates the customer normally purchased. This is not the case. The subscription model is more expensive even for customers that purchased every update.
Looking at the updates to Creative Cloud in the last year I think they were not targeted for the main part of its user base. It would be really interesting to know how many subscribers have been new or existing customers. So if the price for an update would not justify the value it brings it will make no sense. If the price for the cloud would be so low that a customer can ignore updates that are not interesting for him/her than this would be surley more acceptable.
Let’s assume that Adobe is getting away with this scam—which I still don’t hope—and you absolutely need CC to run your business and are also planning to use CC for the next years, it is the best option to sell your old CS6 license now and then pay for a brand new CC subscription. The promo saving is much lower than the value loss of your current CS6. In general it is very disappointing to see that Adobe again and again treats his existing loyal customers the worst.
If you calculate the price for a single product the result is similar. I don’t have access to all of the old prices for single product updates. But if you take for example Photoshop you can easily see that the price for an update from Photoshop CS5 to Photoshop CS6 is $199, while the Creative Cloud for Photoshop only is already $240 per year. Customers again pay 20% more, without having any major advantage that justifies that yearly price increase.
To judge the price for new customers you can estimate the price of a hypothetical perpetual license and the update price per year based on the prices for CS6. Let’s take the Master Collection as the first example again. Then you accumulate the costs for the Creative Cloud standard license and compare. You will find out that for paying $49.99 a month you can use Creative Cloud for 50 months until you will have paid the same price as a CS6 full version costs, but the Cloud also includes all the updates. Sounds great? Yes, but it isn’t. Again your perpetual license would have had a value. So if you upgraded all the time you would be able to sell the upgraded version for a bit less than what a brand new version costs at that time. Since the monthly fee is higher than the calculated monthly fee for continuous updating a perpetual license, it doesn’t matter for how many years you will pay for CC you always pay more—about $100 for each year. Again you have more software and some online space compared to CS. If you don’t need it you pay for it for nothing.
The benefit of subscribing to the CC as a new customer is that you don’t need to pay a lot of money upfront. Considering interest the additional $100 per year is an OK fee, even if you don’t need the extra software. Selling your perpetual license after 5 years you most likely won’t get the full price and would lose some money, too.
The conclusion is that new customers will pay about the same for CC as for a perpetual license that is upgraded all the time. The benefit is that the upfront costs are lower. The disadvantage is that you will again lose the right to use the software after you stop paying!
Let’s look at new customers that just would have purchased a Standard, a Design & Web, or a Production Suite. CS6 Standard is 1,299 and the other two are 1,899. Since a perpetual license has a value the initial costs are again irrelevant as long as the purchase price is not lowered much and you pay for every upgrade to keep up the value of your software. So again the price for updates needs to be compared to the cost of the Creative Cloud. As already shown before, customers that normally buy a special suite would need to pay about twice with Creative Cloud.
The same conclusions are valid for single products again. There are also the Creative Cloud Team version and EDU versions of the Cloud. The Team Cloud offers extra online space, administration tools and two service calls. Adobe charges 40% more for that. Each small business needs to decide if this has value to them. Existing customers and customers that only need a subset of the Creative Cloud software and would have chosen a special suite already pay up to three times more. So an extra 40% is probably not feasible. I wrote small business, because large businesses will receive special volume prices and special features like off-line installers.
I’m not very familiar with EDU prices. Checking Adobe’s website I can see that the regular price for EDU versions is about 40% lower than the regular Cloud version. The promo price is said to be valid only for the first year and apparently will be available only for a short time. For CS6 the Adobe site shows a discount of about 60%. Old Adobe web pages show 80% discount for CS6. So even the EDU Cloud amount to a steep price increase. If I’m not mistaken there were no EDU updates for EDU versions, so the price of an EDU version needs to be spread over the usage time to compare it with the Creative Cloud. Again EDU versions have a value that needs to be factored in.
For the above calculations changes in base prices for perpetual licenses, upgrades or the CC fee and inflation were not considered. While perpetual prices were kind of stable there is no data for CC subscription fees, yet. Due to Adobe’s sink or swim attitude, suppressing customers with update prices in the last year, the steep price increases with Creative Cloud further price increases are to be expected. There is also no guarantee that the development and updates will be kept at the same pace. It is a very sound argument that when customers have no choice anymore, Adobe is lacking a major incentive to innovate. Before customer only bought an upgrade if the price matched the value. If you look at history you can see many examples where innovation stopped because there was no competition or no choice for the customers (e.g. Bell, Internet Explorer). Adobe’s software has also reached a state where much innovation is not really needed. Things can still be made faster and easier or some special features can be added, but in general you can do what you need to do with CS6. It also should give food for thought that Adobe feels it needs to suppress its customers to make more money rather than to make products that customers want to pay for.
With the Creative Cloud subscription model Adobe is further saving distribution costs that are not even partly passed on to the customer. The customer on the other hand might face additional data transmission costs. In Germany for example, the German Telekom is going to limit the flat rates. High-speed access is only granted for 75 GB per month. After that the speed goes down to 384 kbit/s. Businesses that don’t have Internet access need now to pay for high-speed access.
Also keep in mind that many customers from non-US countries reported that local prices are much higher than the US prices considering the exchange rates. A big protest in Australia and the fact that Adobe had been summoned in front of the parliament made them change the prices.
So the myth that the Creative Cloud is cheaper is busted. It might be an option for new customers that need a single product only or the full product line, can’t afford the upfront costs of a classic perpetual full license, would immediately update to each new version, and don’t need to access old files when they end their subscription. For existing customers of a single product or the Creative Suite Mater Collection switching to Cloud is up to 150% more expensive. Customers that only have need for a subset of the product line and would have purchased are hit the worst by the Creative Cloud. They face price increases of up to 300%.
Additionally all Creative Cloud customers need to be aware that they can’t work with their files anymore as soon as they stop paying. It is also necessary to consider the costs and the time to access files after a subscription ends, like price for new software, time to convert, correct, or re-due files, etc. All in all the rage of Adobe’s customers is more than understandable.
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