There’s a big business opportunity for CAD-as-a-Service. Investors in OnShape, which is building a monopoly in this market, value it at almost one billion dollars. This is remarkable: OnShape has virtually no revenue.
None of the leading CAD vendors has made an adequate response so far. Yet there’s no reason they should forgo this large, untapped market. They have a fantastic ace up their sleeves: a mature, proven CAD product.
This begs the question as to how to package and price a CAD cloud proposition? The straightforward answer is: do what successful Software-as-a-Service companies do. Offer a limited (4) set of tiers. For example:
- An Essentials offering, aimed at the SMB segment. The price matches OnShape’s price point of $125/month. It has more capabilities than OnShape, but does not cannibalize the “off-cloud” CAD software. Margins will be thin, but the volume will partially make up for this.
- 3 Additional tiers (e.g. Pro, Enterprise, Unlimited) with advanced capabilities and higher levels of service. The highest tier (Unlimited) can command a price point of 10x – 15x of essentials. In the case of CAD software, this is $1500/month.
Pricing tiers for Saleforce.com. Source: company website.
CAD software vendors need to combine their code with three new capabilities:
A cost-effective cloud platform
Customers expect CAD software running in the cloud to perform as well as on-premise. This is technologically feasible. Unfortunately, the economics are not attractive. Turning GPU-powered cloud instances from Amazon (Web Services), Microsoft (Azure) or Google (Compute Cloud) into virtual CAD machines is expensive. The monthly costs for the computer time, network bandwidth, storage and additional management software start at $150 for a virtual CAD machine. Designairspace offering is attractively priced. Our virtual CAD machines start below $50/month.
An easy-to-use webstore
Buying CAD in the cloud will be like buying books on Amazon or shopping in a supermarket. Customers help themselves. In the CAD webstore, customers buy (subscribe) to CAD-as-a-Service packages, manage their subscriptions, monitor their spending and see their bills. The back-end of the digital store fulfills the orders and monitors and meters the consumption of the CAD software. Designairspace offers white-label webstores. Feel free sign up with our own webstore (for virtual CAD machines) to get a first impression.
A great customer experience with clever digital marketing and tech-touch customer success
Selling and servicing CAD-as-a-Service is very different from selling on-premise software. Digital marketing generates relevant traffic to the vendor’s webstore. It also converts webstore visitors into paying customers. With the CAD software running in the cloud, the use and engagement of customers is captured. This makes it possible to offer an effective, tech-touch customer experience. The goal is to keep net retention high. This is a service that designairspace is happy to provide as well.
Go it alone or partner?
CAD ISV’s should continue to do what they have done best: develop great software products. For anything else, there’s designairspace. To summarize our proposition, we offer:
- A cost-effective cloud platform for CAD Applications,
- Building and running white-label e-commerce stores for CAD vendors
- Digital marketing and customer success services
Opening a digital channel with designairspace is a big step for CAD vendors. Therefore, we propose to crawl, walk, run approach.
- The crawl stage: run a Proof of Value, for example run the beta testing in the cloud.
- The walk stage: do a pilot, for example sign up and deliver online free trials via the e-commerce platform.
- The run stage: The CAD vendors is marketing and selling the first CAD-as-a-Servings offerings, perhaps limiting it to a restricted geography or vertical. From there on, the only way is up.