When Adobe decided to move to a subscription-based model for most of its professional software offerings, it caused quite a bit of frustration, anger and debate among its users and those in the technology industry. Many questioned whether a new recurring subscription software model à la Creative Cloud could work, especially when those who use software professionally for business are typically used to paying a one-off fee for a software package and then being able to use it for as many years as they wanted. But if Adobe's year-end numbers are any indication, the changing software pricing paradigm isn't going to stop many users from adopting a new pricing model.
In Adobe's fiscal year 2013, which just ended, Creative Cloud subscriptions grew by a whopping 1.1 million, bringing the total to 1.4 million paid Creative Cloud subscribers for 2013. But the numbers weren't only good for Adobe. The recurring revenue stream the company gets through its Creative Cloud Subscriptions enables Adobe to push out more significant updates to its Creative Cloud software throughout the year. Previously, these updates would be reserved for new software packages and only available through upgrade pricing. This year, Adobe delivered more than 500 new and enhanced features to its Creative Cloud apps.
Is the subscription-based software-pricing model here to stay? It's hard to say. It may be more popular among professionals than with consumers, who typically are only willing to pay much cheaper prices for scaled-down apps. It would be hard to believe, for example, that a user would be willing to pay, say, US$1.99 per month for a Pixelmator subscription instead of just buying the app for $30. Still, the Adobe news is good news for companies who are looking to increase revenue and add value to larger professional software packages.