Monday, April 27, 2009

Altium's new pricing model

I can hardly believe it's been over a month since my last post.
Things are progressing nicely on our target project but it has taken quite a few twists and turns over the past 6 weeks as has the focus of the objective.  I can't say too much at this point 'cause it aint public yet but all will be revealed soon (very exciting!).
Last week we released new pricing for Altium Designer. It's been really interesting to see the user response to it on the forum.  A number of people have reacted to the fact that our huge reduction in price has severly depreciated their purchase. Others have just been happy that Altium tools will be more accessible to the broadest possible range of designers.  Yet others have taken the synical view that it is simply a grab for cash in tough economic times. From the inside though, I can honestly say that I am excited about the pricing decision as I know it will help a lot of struggling engineers and companies out there and it will ensure that price is much less of a barrier.
So let me know what you think.  Is it still too much? Or is it too little - i.e. will the "you get what you pay for" adage work against it?


  1. I am just wondering how they will fund their development with these low prices.
    As an Altium customer I am pissed off with their announcement as I paid almost 2.5x for their station 2 months ago.
    I would say, after two months really working with it I feel the product is not worth more than what it costs now... pretty shallow, although easy to use for me and my folks

  2. Hi Anonymous,

    To begin with I probably should declare my interests. As you know, I am an employee at Altium and I am also a shareholder.
    As a public company, Altium's financial position is open to the world and according to their latest release to the ASX, their cash position is up 50% on the same time last year and they were sufficiently confident in their position to announce a dividend. So I've got to believe that they can afford to continue development.
    In terms of the value of the product, that will ultimately be up to the individual. If you're using a small fraction of the capability then it may feel overpriced. If you are using a large proportion of it then you will find it extremely good value. We do _all_ of our hardware development in Altium Designer and we also do a lot of embedded application development in it as well (firmware for Nanoboards etc). But I can understand you feeling a little ripped-off if you paid 2.5x current list price only 2 months ago. Having said that though, if it was worth the money then, it is definitely worth the money now.

  3. Dr. Marty,
    Was your reply pre-formulated by the sales department (or what's left of it) or your marketing folks (which are good)?
    Based on your reply I did my homework as well. First I tried to talk myself into reading something positive in what you guys just did. Then I did some research.
    Forgive me my stupidity... I am just an engineer, which makes me wonder "what makes me so important"? Apparently my banking account.
    Is it my naivity buying tools from a small vendor? I thought your organisation is strong enough. But now I have tools I paid 2.5x of what I should have paid and in addition I lost my contact. Shortly after I bought, my sales contact got fired... or how you may call it smartly "restructured". If I would have known that this happens, I could have bought also an even cheaper tool from the web. I was buying into a partnership and relationship, which Altium just destroyed. Is customer relationship via web only really the answer?

    Your comments about the financial status surprised me. If I would be a larger share holder of Altium I would be sleepless. Gladly I sold my Altium stock in 2007.
    ... Yes, by reading through your financial reports I can see that you made more money compared to the previous period last year. And Altium made finally profit by end of 2008. But it appears to me like you are currently burning through all this cash. Your cash is down by almost $4M in Q3 compared to the quarter before. What did you do with this money?

    I would possibly conclude that each of your and every Altium engineer's paycheck should state "What makes YOU so important"?
    8 weeks ago it was my sales contact. Tomorrow it may be you.
    Is this what you wanted to accomplish with this price?

    Let me summarize my experience:
    I paid 2.5x more than today
    My sales contact is gone
    Your company eats more than you can cook.
    So what do you think?
    What should make ME so confident?
    Why should I be convinced I made the right choice?

    BTW... I was evaluating your Nanoboard. If that's where your company spends all their R&D money, then I might really have invested in the wrong vendor.

  4. You made the right choice because Altium is committed to lowering barriers and providing you (along with all engineers and designers) with access to the latest design technologies. Sometimes that means adding new functionality. Sometimes it means adding support for new domains such as FPGAs and Embedded Systems. And sometimes it means setting our pricing to a level that ensures it is accessible to the broadest possible range of designers.
    The partnership that you bought into with Altium extends far beyond the relationship you had with any single salesperson. It is an ongoing relationship that includes membership on our forums, access to training material, and ongoing updates as per your license.
    I'm glad you made the point about Altium employees asking themselves what makes them so special. I know, as does every Altium employee know, that I must continually deliver value. My job is not a right. Nothing I have done in the past earns me the right to sit back on my laurels. I must continue to innovate and push forward.
    This is no different for our customers. We launched the "What makes you so special" campaign because we want to make it clear to our customers that they need to continually ask themselves what they are doing to ensure their ongoing success. If they cease innovating today then there is no future for them tomorrow. The world is in the grip of a severe financial crisis that is effecting many good people through no direct fault of their own. It's as good a sign as we're ever going to get that we can't just go on doing business as we always have done. There are 300,000 graduate engineers being created in China every year. If we think that we are ever going to remain competitive by just laying out PCBs better then we have to rethink our approach. We need to embrace new technologies and learn to apply them in new and innovative ways. We need to focus on building great customer experiences and not just building great electronics products.
    From where I sit, I know that Altium understands the challenges in front of designers around the world. And I know we are committed to ensuring our customers success through this difficult period of change. That is why you can be confident you made the right choice.

  5. Ms. Lo Russo's departure would seem to indicate some disagreement in the ranks, or to be more precise, in the executive ranks.

  6. I will be interested to see what Altium declare for the 2008/09 revenue numbers some time after 30th June. Yes, they showed a small profit at the half year but this was mainly due to the windfall of a strong Euro versus the US Dollar. The last quarter to 31st March was nothing like so rosey. I suspect the savage cut in prices is more to do with panic in the Altium boardroom at this quarter's likely numbers than some kind of far sighted re-write of the EDA price rule-book. It's noticeable that the maintenance prices haven't shrunk by the same proportion as the purchase price. Pre price cut the Altium Designer was $11,000 with maintenance at $1,500 pa so that's 13.6%. It's now $3995 with the maintenance at........ $1500 pa, so that's now a stunning 37.5% maintenance. Most people expect annual maintenance in the band 12% to 15% of original purchase price.

    It appears the strategy with these price-cuts is to attract a large-scale shift to Altium by the PADs, OrCAD, etc, fraternity during this quarter, made-up with maintenance at pre-price cut rates next year. Plus, they see themselves as the de facto standard in China. Snag is Dr Marty, most folks in China still don't like paying for software... 95% of software used in China is pirated.

    In my view they have taken a massive, dare I say reckless risk with likely revenues and share price. If they get it wrong, then oh brother, Altium stock will collapse some time later this year.

  7. Can you make a comment on the entry dated May 9 re: "Ms Lo Russo departure". I believe Emma Lo Russo is, or maybe now was, President of Altium. If true this looks kinda important and should have been announced.

  8. Is this blog still working? There's been nothing from Dr Marty for nearly 2 weeks. Maybe he's on vacation - or been fired....?

  9. It took while for me to get back Dr. Marty.
    But apparently your blog has been shut down by your management.
    I was shocked when I read from the other blogger above that Emma is gone .. leading to some more research on my side.
    But one step at a time:
    Gladly I know that I am special... no matter how much you and your company want to talk me out of this. What I also realize slowly is that Altium Designer is not what you describe above. You are saying, you are providing me with the latest technology? Well, I was just struggling to get a design with highspeed bus structures an DDR2 memory completed. I do no think I am a bad designer, but Altium Designer gave me a hard time. Honestly, I have seen tools for me that would have done the job in a fraction of time.
    In fact.. your sales guy did a shiny glossy job. But as a matter of fact I feel like I did bet on the wrong horse.

    And so may you and Emma LoRusso.
    I am just wondering, did she screw up or did she just leave because she felt that this is all weird? I hope she is the smart person :-)
    When reading your last years report I found that you guys never had the chance to vest your stock options, withone exception over the last decade.
    Is there a wave of frustration going around? How do you feel about your stock options? How did Emma feel about them?

    All in all I am wondering, Dr. Marty: What makes you so special? What makes your company so special?

  10. Hi , Am Hasan Karkra. Fresher graduate. I have interest in electronic circuit designing. I learn OrCAD software for schematic designing and layout of PCB's. This learning is not moving in practical shape. I am familiar with ALTIUM as same as OrCAD. schematic design and PCB layout. Please guide me in which direction i have to put my effort, because there are lots of fields in ECAD. so that in future am coupled with electronics. suggest me some more learning material.

  11. Hi Hasan,

    The best advice I can give you is to try to skill yourself beyond schematic design/PCB layout alone. Try to get some skills in the software/FPGA design side of things too since that is where a lot of the real value is being added to products these days. If you are in a position of being able to add value to the products you create then that will make you more valuable to your employer / customers.

    I have used both OrCAD and Altium Designer in professional capacity however it has been some time since I last used OrCAD in that way. My personal opinion is heavily biased but I think it is for good reason. Altium Designer is the only design tool out there that takes seriously the problems faced by designers trying to build products from start to finish. As a result, it includes all of the tools / features you need for the vast majority of design work. So you can do schematic, PCB, FPGA, embedded software, ECAD/MCAD, simulation & CAM.
    If you want to learn more about it, take a look at the free training videos on Altium's website:


  12. I see some strong resentment from an anonymous commenter regarding the Altium price reduction, and I think it is rather unfair! To someone so well "educated" in the "failure" of Altium, I would like to ask one question: How come you purchase a product BEFORE doing your homework, and then still at a price that is 2.5x higher? It is really pointless doing all this homework after you bought it. I do have sympathy with you paying this price 2 months before the drop, but such is life and you must have been convinced you were getting value for what you were paying at the time!

    I for one welcome this decision in dropping the price! I think it was a bold and positive move. To me it shows a commitment from Altium to the industry they serve, which is so rare today in a world typically ruled by financial types and passive "shareholders" who are only interested in lining their own pockets in the short term (not that all of them are like this I must admit!).

    I am one of those engineers who would not have had access to a design tool of this stature, was it not for the price drop. Although I work for a large company, it is situated in a third world country where you have to multiply the price of everything with 7 to get to the US$-value, except of course salary if you're an engineer. Altium got me out of the stone age of electronic development!

    I think the launch of Altium 10 is great, and shows that there are still things happening at Altium at present, but just a bit surprised that the product is still only 32-bit. I do have concerns about the financial status of the company, as I perceive bold moves to almost always go along with a fair amount of risk. I hope Dr Marty can comment on the current state of affairs in this regard.