SolidWorks Stays The Course

That three-dimensional CAD software, SolidWorks Office, is priced at $4,995, compared with the $3,995 that customers used to pay about five years ago when SolidWorks CEO John McEleney joined the Concord, Mass.-based company.

That's in large part because the company reinvented its 3-D modeling and CAD software as a bundle, ala Microsoft Office, according to solution providers.

"When everyone else is cutting their prices . . . we're going in with a more expensive product than we had before," said David Darbyshire, engineer/partner with Microsolid Solutions, Pontiac, Mich. "When you have cost-conscious customers, it's easier to pull away functionality and bring down the price than it is to upsell them."

What's more, there's a $1,295 subscription component tied to SolidWorks Office. McEleney estimates that the attach rate for those subscriptions, which entitle users to download upgrades and other add-ons for a year, is 90 percent. The average renewal rate is 80 percent, he said.

"In a very tough economy, recurring revenue is king," McEleney said.

What all this means is margin integrity for SolidWorks' partners as they compete with the market leader in two-dimensional CAD software, Autodesk, he said.

The subscription policy has been highly successful for Computer Aided Technology (CAT), which joined SolidWorks as its first U.S. VAR around 1995. CAT chose to represent the developer because of its strong 3-D technology, said Bob Roberman, president of the Chicago-based solution provider.

"People are not just looking at what's here today, they want continual updates," he said.

SolidWorks, part of French vendor Dassault Systems, is vying for share as engineers, manufacturers and other users of CAD solutions invest in 3-D technology. The company counted approximately 188,000 users at the end of the first quarter. An average sale represents about four seats per customer, McEleney said.