A few weeks ago, I decided to do something wild and crazy:
Buy Adobe Creative Suite 5.5. I already own a legal boxed copy of Adobe Creative Suite 3, so how hard can an upgrade be, right? I went over to the Adobe website, to be greeted with this encouraging message:
That’s great, right? 20% savings! After telling Adobe I own a copy of CS3 Design Standard, I got an upgrade price of $699 for Design Standard (not Premium, mind you). That’s a lot of money, but I decided to bite the bullet and buy it anyway. That was when surprising things started happening.
What I Would Expect (Sane Pricing Policies)
Above you can see a screenshot of Steam, one of the main ways to buy downloadable PC software today. Sure, it’s games, but my point is that you see a price, you click, you pay, and you get your download. Pretty simple, right? The Android Market makes this even simpler by converting prices to your own currency. I could find numerous other examples of organizations selling software like this, because this is how software is being sold these days.
So, since I am purchasing a downloadable product, I was expecting to pay for it, get a link and a key, and be on my merry way. Sure, $699 is a lot of money, but that’s the price so I guess I just need to cough up the money.
What Actually Happened
Just before checkout, the promised 20% discount was applied, and the price dropped to $559.20:
And then… I clicked Checkout.
What’s that? An error? That’s odd – I didn’t even get a chance to enter my credit card information. Perplexed, I called the number shown above and explain I was trying to buy Adobe CS 5.5 with a valid international credit card.
Adobe’s rep told me that she’s very sorry, but I simply cannot buy CS 5.5 via the website. I must have an American billing address, or else they can’t sell me the product. Country-based limitations are nothing new; Amazon’s Android App Store only works within the US, for example. Hulu and Netflix are also geographically limited. But what’s different in this case is that the product I am trying to buy is available for sale in my territory, by the very same company, Adobe, who keeps offices in Israel (my territory). They just won’t sell it to me via the website.
If this was where the story ended, it would just be an example of corporate inefficiency. Can’t buy it on the site, big deal. But wait, the plot thickens.
Once I realized my only option would be buying the application locally, I had to work with Adobe’s network of local distributors (Adobe would not sell directly to me, a lowly customer). I had to email each of them separately and wait for quotes. After a few days, the quotes started flowing in, and were around the $800 mark for an upgrade from CS 3 to CS 5.5. Adobe sells a separate Middle Eastern version, but I asked specifically for the English version, so the price difference is not because of any difference in the product.
One distributor went so far as to tell me that I would have to wait two weeks after paying, because Adobe does not allow them to hold upgrade boxes in stock. And this is for a product that is available for download from Adobe’s official site, and which I didn’t even want boxed in the first place.
So an Adobe product that costs $559 in the US costs around $800 in Israel, a country where the standard of living and the GDP are by no means higher than in the US. And you can’t download it, but must buy it boxed. And you might have to wait two weeks before you get it.
An International Situation
At first, I thought Adobe must have something against Israel (it happens). But then I started searching online, and started finding articles like this one (shown above, PC Pro), this one (from The Next Web), as well as forum posts discussing Adobe’s pricing policy. Take Adobe CS 5.5 Master Collection, for example. This item costs $2,599 in the US. If you buy it in the UK, you would have to shell out £2,268, not including the 20% VAT. That is $3,499 pre-VAT – a $900 difference!
It turns out Adobe has an intentionally discriminatory international pricing policy. If you are outside of the US, you will often have to pay much more for the same exact bits and bytes a US customer gets.
PC Pro put it best when they said: This isn’t just a question of best business practice. Adobe’s whole cross-platform design vision is built on the principle of a universal and level playing field. The same can’t be said of its pricing policy and it needs to be changed.
Adobe’s Official Response
I wrote Adobe’s Senior Channel Manager Israel, Mr. Avi Zrihan, to ask what gives. It took him three working days to reply, but he finally got back to me with the following boilerplate:
We establish our prices for Creative Suite products on a regional basis using a consistent methodology. Local market conditions significantly influence our pricing.
Local market conditions include: the costs of doing business in different regions and customer research that assesses the value of the product in the local market.
The cost of doing business in EMEA is significantly higher per unit of revenue earned than it is in North America. For example, in a large homogenous market like North America, we can achieve certain economies of scale that affect pricing. Outside the US, by contrast, we must support diverse regional market situations with 2 major currencies, and 15 major languages—which results in higher costs.
That’s very interesting. How come other companies (Microsoft, Corel, and others) can support the same “diverse regional market” without hiking up the price by a crazy margin?
Another part of corporate newspeak that I like: “The cost […] is significantly higher per unit of revenue earned”. In other words, not as many people buy Adobe’s products in this market. Gee, I wonder why!
Adobe’s pricing policies seem to be as creative as their products. Their inventive regional pricing and bizarre practices leave users with two choices: Pay a crazy markup for the same product, or be a “pirate”. Or am I reading this the wrong way? Let me know below.