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Why does Adobe Photoshop cost so much? [Pricing Model]

If you’re like me you needed to download Adobe Photoshop, so you went to Adobe’s website and realize that it costs almost $20 a month! While that may seem like a lot of money, how can they afford to charge so much?

Well in this post we will take a deeper dive into why Adobe Photoshop cost so much. We will look at their pricing model, the history of the cost of Photoshop, and a quick overview of the discounts and alternatives to using their software.

economics

Without a doubt, Adobe Photoshop is the industry leader for editing photos. But is also used by designers to create website designs. Yet this is slowly changing, as many web designers have started to move to programs like Sketch. This doesn’t mean that they still have Photoshop, as Illustrator is the gold standard in logo design.

Adobe Photoshop used to calm like most software with a one-time cost. The issue with this is that Adobe would get paid a large sum and then have to wait multiple years to be paid again. We have seen tons of software provider switch to a recurring revenue model. It helps decrease the swings in purchases, allows the software company to provide more regular updates, and ensures that all users are using the most recent version.

When the new creative cloud costs came out many users were very upset that they would no longer be able to purchase the software at a one-time cost. Yet the reason they’re able to charge so much is because the software is used in the design industry, where the cost is relatively low to what is charged for services. Now Adobe understands the Photoshop is also used recreationally by those who are not professional. For this reason, the offer Photoshop at a discount of 50% what you would pay for all other Adobe standalone apps. You’re actually able to get Photoshop and Light Room for $9.99 a month. Additionally, you can save some money by getting there one-month free trial.

When Creative Cloud was announced in 2013 CNET ran a great article about the new cost structure titled”How greedy is Adobe’s creative subscription? Not very.” They calculated that a customer who would purchase a standard version of the old software would pay about $1600. This rate was calculated by looking at the price increases over three years to purchase the most up-to-date software. By comparison, creative cloud will cost $1800 for three years worth of software. The Argument they make is that the new creative cloud cushion model gives users access to many more applications than before.

If you really want to know the reason why Adobe can charge what it does for its software, we will have to dust off our old economics textbooks. Price is determined as a function of supply and demand in the marketplace. One of the things that influences demand is how sensitive customers are to price. This is usually a function of the number of alternatives that are available, the switching costs, and how badly they really need it. If you’re interested in looking this up just check out elasticity economics.

When we look at the creative suite all of the economic factors are in Adobe’s favor. Switching costs are relatively high. To change to new software, you have to spend potentially hours learning how to use it. This is especially difficult as the Adobe proprietary file types are the industry standard. Imagine sending someone a file which they didn’t know how to open. I could see this happening very easily with a printer for example.

The second thing to look at is the alternatives. Until the introduction of Sketch, there were not a lot of great alternatives to the creative suite. sure there are free versions of software that do a similar thing, but none of them are as robust or supported with such a strong community that Adobe has.

You can look at new products and see how they price them more competiitve. In our review of Adobe stock their pricing is quite competitive. They even are offering a great discount to try and get more users on their platform.

At the end of the day for many professionals Adobe’s tools are necessary. Though they don’t have a monopoly on the market, they comprise a large market share. For many creative professionals, it is just the cost of doing business. Honestly for professional users the cost is quite low when you compare to traditional enterprise software costs.

Written by CrazyLeaf Editorial

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