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Upgrade prices: no erosion here.

First-time buyers may be getting deep discounts in the retail channel, but upgrade prices are another story entirely. Over the past two years, software developers have been nudging upgrade prices steadily upward--by as much as 20% at several price points. That's the trendline our latest Upgrade Pricing Survey reveals for a broad-based sample of 215 PC and Macintosh business applications.

Like our first Upgrade Pricing Survey (Soft.letter, 6/3/91), this year's survey compared single-copy upgrade price offers to the corresponding suggested retail price (SRP) for each product. For the entire sample, we found that the median price for upgrades is roughly 26% of SRP. But that ratio isn't particularly meaningful. When we analyze upgrade price ratios according to SRP price ranges, it turns out that the ratios vary considerably, from 37% of SRP for the least expensive titles to 19% for titles at the high end of the price spectrum:
SRP Range 1991 Median % 1993 Median % 1993 50% Range
$30-$150 32.9% (61 titles) 36.9% (50 titles) 27.5%-47.5%
$151-$350 26.4% (69 titles) 31.7% (43 titles) 26.4%-36.8%
$351-$500 18.8% (55 titles) 22.2% (67 titles) 18.0%-30.3%
$501+ 18.2% (44 titles) 19.0% (55 titles) 14.4%-24.8%

Sources: Corporate Software 1991 "Upgrade Review"; 800-Software "Upgrade Report".

In addition, we were able to identify nine specific retail price points that account for 69% of the titles in our database. (It's interesting to note that almost 22% of our titles now cluster around a single price point, $495-$500.) Almost all of these groups have shown some escalation in upgrade pricing, ranging from 25% increases for the $95-$100 and $149-$150 categories to a relatively modest 2% increase for the $295$300 category: [TABULAR DATA OMITTED]

Finally, we took a look at the relationship between DOS and Macintosh upgrade prices. Two years ago, we found that Macintosh developers seemed to peg their upgrade prices significantly below comparable DOS prices; this pattern remains unchanged. This year's sample included 166 DOS and 38 Macintosh titles. The overall SRP distribution for the two samples is roughly comparable: The median DOS SRP is $399, the Macintosh median SRP, $397. But the ratio of upgrade price to SRP for DOS products is 26.4%, while the Mac ratio is 21.8%. Pretty clearly, Mac developers are leaving a good deal of money on the table.

(For those who'd like to explore our upgrade pricing database in more detail, spreadsheet versions in Excel and 1-2-3 format are available that contain product titles, version numbers, upgrade prices, and SRP data. Price: $50 prepaid. To order, call Allison Byck at 617/924-6279; please specify DOS or Macintosh disks.)
COPYRIGHT 1993 Soft-letter
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Date:May 21, 1993
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