I was thinking about the fact that, yet again, there is a new version of Adobe Photoshop out, version CS3. For their standard package, a new user has to swallow a $649 price tag to get in the door. If you are lucky enough to have an older version, you can get into the upgrade for $199. CS2 was released almost exactly one year prior to CS3.

This got me thinking about software prices in general, but I will stick with Photoshop for this example. My guess is that Photoshop has one of the highest percentages of piracy in it’s install base. Adobe gets nothing from those people. A certain portion of those pirates are going to steal it regardless of the price tag, because that’s what they do. I can’t help but wonder, however, how many people say “$650! Screw that!” and hop onto a file sharing network, cutlass gripped mercilessly between their clenched teeth.

Of that latter group, I would guess that some percentage would be willing to buy it if the price tag weren’t so high. So how could Adobe lower that price bar and net the cash from these pirates? Since the upgrade is $199, and the release cycle appears to be 12 months, you are essentially paying $16.60 for the new hotness. Why not offer a service at $20 a month to use the software, possibly with some larger lump payment to get going ($50). Now someone only has to come up with $70 to get into their product instead of $649.

Now the real benefits kick in. Instead of waiting a year for new features, they can roll them out in real time as they are developed, creating a more agile product for their customers. They could also experiment, tossing in features here and there on a trial basis, without some delicate, long impacting consequences.

If adoption of this practice took off, they could even lower the price to grab ever increasing percentages of those fence dwelling pirates, until the inconvenience of finding and implementing the pirated software overshadows the barrier to just plain purchasing it.

Until then, bon voyage!