PTC anti-competitive pricing

[iturner]

Though you would be interested in this article on ralph grabowski's blog

http://worldcadaccess.typepad.com/blog/2007/11/maybe-this-is-w.html



Non-Japanese CAD companies openly admit they have problems selling their software in Japan. Some of them blame their staff their or the way the sales structure is set up. Have any of them given a thought to pricing? <u>Pro/ENGINEER Walker</u> did.

I've converted the prices listed by the site to US$. Note that some countries include all sales taxes in the retail price, while others exclude it.

<u>Foundation XE package</u>
USA - - $4,995.
Japan - - 985,000 Yen = US$8,700.
UK - - £4,500 = US$9,500.
Germany - - €6,390 = US$9,400.

I can understand some price differences for translated versions but the UK version is identical to the US and downloaded from the same website.

These prices are anti -competitive as we compete against US businesses for the same business - how can we do that when our principal CAD system and many other types of US software is priced in this way.

[gchampoux]

Aren't price markups of this type typical with all CAD software (not just Pro/E)?
I suspect that this is the case for all US products sold elsewhere.

[dgschaefer]

What about Solidworks, UG, Catia, etc.? Are their price differences similar in these countries? If so, then it seems like parity. Don't get me wrong, it ***** when you have to compete against US companies, however, your UK competitors even on other CAD systems have the same problem.

I think it has to do with country specific pricing not keeping up with changes in exchange rates, notably the falling dollar. Here in North America, the Canadian dollar is about even with the US dollar for the first time in decades. It's been at 75-80% for as long as I can remember. Canadians are complaining that their cars are overpriced now because stickers were set based on the traditional exchange rate. So a $30,000 car in the US might be priced at $38,000 - $40,000 CDN, even though the two dollars are basically equal in value now.

Ironically, 7-8 years ago it was the reverse. The dollar was uncharacteristically strong and US buyers were buying 'grey market' Canadian versions of vehicles to save thousands. The problem was that doing so (and the same is true today for the Canadians) voids the manufacturer's warranty.

At any rate, it would seem that there's an opportunity for PTC to undercut the competition and get a lot more users in these countries.

Doug Schaefer

[iturner]

If all the CAD software companies are keeping a relative price difference in each country e.g proe = 1.2x solidworks, catia = 2x proe, some people might suggest an illegal cartel is in operation???

Ian Turner
CAD Manager

Flight Refuelling Ltd

[gchampoux]

I believe we are missing a couple of important issues:

1.
We cannot assume that cost of doing business is the same in the USA vs. elsewhere.
Tax policies in most nations (such as VAT) adds cost, which must be passed on to the buyer.
Similarly, do not assume that all the funds go to PTC.
I suspect that only a small portion of purchase costs go to PTC.
The bulk probably stays within the country to pay local salaries and operating costs.

2.
When all is said and done, it is a free market.
Companies can charge what they want based upon supply and demand.
If PTC is charging "too much" other vendors have the opportunity to undercut PTC's prices and gain business & market share.


Gerry Champoux Williams International
Lead Engineer 2280 E. West Maple Road
Information Technology Walled Lake, MI 48390
' (248) 960-2816 7 (248) 960-2607
* - <">mailto:-> * www.williams-int.com

[iturner]

1.
We cannot assume that cost of doing business is the same in the USA vs. elsewhere. That doesn't account for doubling the cost. The cost of doing business will be bound to be higher if every software vendor charges 2X US price.
Tax policies in most nations (such as VAT) adds cost, which must be passed on to the buyer. The business can offset VAT
Similarly, do not assume that all the funds go to PTC.
I suspect that only a small portion of purchase costs go to PTC.
The bulk probably stays within the country to pay local salaries and operating costs. There are not many PTC staff based in the UK anymore, we would be happy to buy US licences and use email only support rather than utilise 'in country' support plus most of our support is coming from Europe and other countries which can be difficult to understand with heavy accents. Nowdays I avoid ringing support and place a call on the web.

2.
3.
When all is said and done, it is a free market.
Companies can charge what they want based upon supply and demand.
If PTC is charging "too much" other vendors have the opportunity to undercut PTC's prices and gain business & market share. Not if they agree not to compete on price because there is limited growth and it is very costly to switch CAD package.

Comments in italics


Ian Turner
CAD Manager

Flight Refuelling Ltd

[gchampoux]

I agree that PTC's non-USA pricing appears to be high.
I'm only saying that I do not believe that there is anything illegal or improper going on.

I have frequently seen European advertisements for various products, and it is commonplace for pricing to be 2X of USA pricing (after normal currency conversion).
Have you looked at any PC pricing lately?
I find no surprise in PTC's pricing to be in like manner.

However, I do agree that the reasons are not clear as to why this is the case.
I only offered what I perceive to be reasonable contributors to the cause.
There certainly may be others.

I stand on my statement regarding free-market pricing.
If there is truly a limited growth potential, that implies a reduction in demand, which might result in lower prices.
There must be some other factor(s) keep the price up.

I do agree that it is costly to switch to another CAD package, but that is true for everyone.

[iturner]

The difference with other goods whether it is a PC, car, jeans, ipod is that I have the option to buy it in the US and as long it is viable to ship it and pay taxes it will be cheaper than UK. PTC however don't allow you to buy in the US (we have offices in the US) and use in the UK.

In a web enabled world where the software is downloaded electronically it makes most of the arguments for maintaing a large differential seem weak.

Some software we buy is charged in dollars, and many smaller US companies don't bother collecting VAT for the EU on downloaded software either.

Ian Turner
CAD Manager

Flight Refuelling Ltd