Users Will Be Hit with Annual Price Increases as an Incentive to Move Off of Maintenance Plans

A day of reckoning is coming closer for Autodesk customers. Starting June 1, customers who get product updates and technical support for perpetual licenses of Autodesk software with an annual maintenance plan will be hit with a 5% price increase. That increase will climb to 10% next year and 20% in 2019.

Those users will be offered the chance to lock in a “loyalty discount” that amounts to 60% off for the next two years if they move to Autodesk’s new subscription model instead of renewing their annual maintenance plans.

The price hike is designed to make product subscriptions look more attractive as the company seeks to move nearly two million customers off of their maintenance plans, Autodesk executives said during the company’s first-quarter earnings call with analysts and shareholders.

“We believe that there will be a relatively small number of maintenance plan customers by the end of fiscal year 2020, and we’ll determine the best course of action for the subsequent renewal periods,” said co-CEO Andrew Anagnost in prepared remarks during the call. Later, in response to an analyst’s question about the expected rate of adoption of the subscription model, Anagnost said, “We have a clear goal to get as much of that maintenance base moved over to subscription by fiscal year 2020 as we possibly can.”

Overall, Autodesk said subscriptions increased by 233,000 during the first quarter, reaching a total of 1.32 million. However, another 1.97 million users are still on maintenance plans, and the company said maintenance plan subscriptions were down less than expected in the quarter. Another large group of users is the 12 million worldwide who don’t pay for Autodesk software; the company is going to “systematically pursue” converting pirates to paid subscribers, Anagnost said.

Autodesk posted a net loss of $129.6 million ($0.59/share) in the quarter, compared to a net loss of $167.7 million ($0.75/share) in the same period last year. Revenue is down, as expected, during the company’s transition to its new business model, but is expected to rebound once substantially all of the company’s customers are on a subscription plan.