Back in January, Onshape had 3.9% overall CAD market share…

Onshape, the Cloud CAD vendor founded my many of the original team behind Solidworks, announced a number of changes to their plans today.  The short summary is they’ve raised prices on the Professional version for those paying monthly, added some power there, and cut the power available to users of the Free version.

Here’s the specifics on what they did, according to Jon Hirschtick’s announcement on their forums:

  • Removed document counting and storage limits on the free plan–users can now keep unlimited documents.
  • Added a 21-day Free Trial of Onshape Pro.  Before, the free plan served as the trial.  This allows trial users to create many more private documents during their evaluation, which is probably essential to Pro user adoption.
  • Removed Private Documents from Free Plan.  Existing plan users have until Dec 15 to activate a free Pro Trial to keep their private documents, or export them.  If that Pro Trial expires, the documents stay private, but they’re read only and the user will have to purchase a Pro plan to edit or transfer them.
  • The monthly price for Pro Users is going up from $100/month to $125/month–a 25% increase.  If you buy a year in advance you will pay the same $1200.  In addition, existing Pro users will be grandfathered in at the old $100/month rate.

These changes are fairly significant for both the free and pro versions.  The good news is there are no storage limits, which makes a lot of sense in this day and age when storage is so cheap.  The bad news is the monthly pro price went up substantially–25%–and free users have lost all ability to have private documents.

That forum post I linked to was full of negative reactions that largely boiled down to unhappiness about the loss of private documents on the free plan and the fact that the company has not provided a less expensive but limited “Prosumer” version that occasional users could adopt.  I have also started to receive some notes from CNCCookbook readers, which is what drew my attention to the announcement.

The post was listed as having gone up at 6:26PM EST, by the time I looked at it at the time was 7:42.  In a little more than 1 hour there were some 30 comments on the post.  My hand count was that 23 of the 30 comments were negative while the other 7 were either questions or Onshape folks’ answers to the questions.

It’s dangerous to read too much into the tea leaves on these things.  In my experience, when a Cloud Software Vendor raises their prices, it means one of two very bipolar things:

  • They’re doing fabulously well, see no competition in sight, and raise prices just because they can to fuel further rapid growth.
  • They’re having trouble growing and they raise prices because it’s the easiest way for a subscription based model to grow revenue quickly.

Figuring out which scenario is reality is complicated because Onshape’s growth is being held to a very high standard due to the amount of Venture Capital they’ve accepted.  Their investors will insist on Unicorn growth and will force drastic changes if it isn’t there.  You don’t raise $169 million in capital without promising to deliver some pretty amazing results in short order!

Personally, I think they’ve made a strategic error in not providing a Prosumer tier that’s less expensive. There are a number of folks who just can’t justify $1200 (paid annually) to $1500 (paid annually on a monthly basis) for CAD.  There will also be folks who can afford it, but don’t see enough savings versus their desktop CAD to switch to Cloud CAD.

There is a long track record of companies converting from desktop to Cloud models, and Cloud companies competing with desktop companies that have proven keeping a strong economic incentive for the Cloud solution is a proven success formula.  Raising prices this early in the evolution of the market seems to fly in the face of that.

The other thing is that Cloud Vendors accept as gospel that when you raise prices, you must grandfather the existing customers.  Onshape partially did this when they grandfathered the monthly pricing for their pay customers, but they didn’t grandfather the free users at all.  Instead, they cut back their service levels.

If it had been me calling the shots, I would have likely gone with the Pro price increase–I am just going to accept on faith that whichever of the two scenarios they confronted made sense to increase prices.  But, I would’ve done 2 things for the low end of the market:

  1. I would’ve kept the limited private doc support in the free version.  Come on, there’s minimal savings in eliminating it and it’s hard to believe you’re really going to force a bunch of folks who could live with the very limited private capabilities to upgrade.  All this accomplished was to create all the complaints.
  2. I would introduce a mid-tier at a lower price, at least half the current annual prices, which much more limited capabilities.  Onshape will know exactly how many docs their existing pro audience has on average and how much capability they could offer a mid-tier without cannibalizing the Pro business. Plus, a certain amount of cannibalizing is fine if the mid-tier is a good enough deal to ignite new growth.

I think those two moves would’ve had Onshape coming off as heroes, but then it’s always easy to be an armchair quarterback.

I am going to be very curious the next time we do our CAD survey to see what’s happened to Onshape’s market share in the wake of this change.  The anniversary of the survey is coming in January, so we don’t have long to wait.  I do the CAM survey in December, but I may try doing both surveys in December to try to get a more clear look at what’s going on in these markets.  In particular, the relative market shares and growth of Fusion 360 and Onshape will be quite interesting.

I hope all turns out well, as I quite liked Onshape’s UI.

What are your thoughts about these recent changes?  Tell us in the comments below!


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