So what kind of budget goes into R&D'ing a new plug in? $100,000? $500,000? $5? Where to the costs come into play? Testing? Rentals? Scopes? Pizza and coffe budget? If you develop for Digi, do they get a chunk of your profits?

if there's come clause about non-disclosure feel free to give it too me hypotheically

I'd be interested in knowing this too, e-cue, but I can't imagine you would ever get an honest answer from any manufacturer for the fear of being unable to justify their pricing....

I don't think anyone can honestly justify $400 for an EQ plugin, personally. I won't name names(!) but the companies who try and make out you are buying pieces of history are the worst type. Make it look like a vintage compressor and sell it for $x extra is pathetic.

At the end of the day, you're buying a CD with the plugin on and some packaging, so charge $20 for it and vastly multiply the sales(?)... maybe then there won't be so many [k]'s in people's plugin folders.

Interesting post. What made me start to ponder this subject was the current project I'm on has a budget of about $500,000. When this record is done, it will sell for less than $20. When people plop down $20 for the cd in virgin megastore, they won't need to register an Ilok. They won't need to buy one, They won't need to plug the Ilok in everytime they want to hear the cd. They won't need to log online and register, or fill out a card and register to play the cd freely. And yet, there's a great chance it will get leaked and MP3'ed globally before the record even comes out.

Basically, I'm looking for parallels between the two.

And yes Messiah, I believe a lot of the R&B goes into graphics of old school pieces of gear that TRY to sound like the original but don't always make the grade. but many times I still fuck with they anyway just for a different vibe. Similar to when digital reverbs 1st came out, many people hated the fakeness and low bit grit of them, but many grew to like them and are now very much in style for their character.



btw, there's a hidden message in there somewhere... see if you can find it

(You didn't really need to highlight it e-cue, I got it anyway!!)

Kent (and all), this "intellectual property" business irritates the **** out of me. Of course I understand the principal of it, but I have the same thoughts as e-cue on this. I get paid to produce an album, ultimately my fees come from the sales of CD's. I don't go on about my production input being "intellectual property" of mine, neither do the musicians from coming up with parts, or most importantly, the songwriter who has the initial concept of "intellectual property" that starts the whole ball rolling. Add to this the A&R, the marketing, the press guys, the publishers and I've worked on projects that have cost upwards of £2 million by the time CD's have hit shelves.

Imagine if a CD cost $100 to account for all this "intellectual property" involved in the project, does anybody really think there would be an increased profit margin over selling CD's for $10-15? I believe profits would be greatly reduced and I think plugins could do the reverse and increase profits. ($399 for an EQ, "where's the [k]", $19 for an EQ, "where's my wallet").

As e-cue rightly pointed out, these CD's are at a much higher risk of piracy than plugins, or software generally, and as such I think plugin companies standpoint on the issue is what will eventually kill them off. YMMV, but I hate the fact that we create a market for them to rip us off so obviously.

e-cue

you nearly had a good point with the CD thing, but it's not as simple as that...

how many people would buy a top-selling album? How big is the potential market for, say, BF's Pultech EQ? Somewhat different scale I'd imagine. Also, BF won't be getting a kick-back every time a song which uses that plug-in is played on the radio and there aren't a huge number of BF t-shirts out there. I'm guessing that for every 10 copies of a plug-in being used, only one is legit (or is that optimistic?). These are specialist products for a specialist market (ie low numbers in business terms), so I can see how pricing is what it is. Not saying I like it, mind you... I'm more in the "lower the price -> shift more legit copies" camp.

Kent, you are probably right regarding hardware. There's a bang for buck factor that you just can't get from a piece of software. Whether this is simply our generation and future generations' opinions will change, I don't know, but there is certainly something that shouldn't be discounted about being able to "have and hold" a piece of hardware.

You only have to check the feeling amongst all the slutz here, there's nobody lusting after plugins is there........

btw, no offense taken and I agree with most of your points, although it's hard to know where to draw the line. Yes, I provide a "service" but it's a service of creative intellect.... I still fail to see how a boffin sitting in a room writing code has more justification to charge for this than I have.

I think the only problem with t he cost of plugins is that prople try to justify them bu saying that they are so much less than the hardware unit. I say design a plug that does something of its own ( read, sound blender for instance) and charge what you need, and what you can get. Sure, stuff is expensive, but there is more involved than a scanner and an afternoon to write code, I would think. If something is too expensive, dont buy it. If something will pay for itself, or is vital to you, it is worth the money.

disclaimer: piracy is wrong and I'm sure no one here has ever downloaded pirated material **wink*


I agree. They are two different markets but there are similarities. Like I said, that's the reason I was asking how much R&D does cost. This is why I didn't ask how much R&D of a hardware unit is. I don't care honestly how MUCH the plug in's cost... When I do like the plug in I try out, I usually go as far as to buy it directly from the company so I know the money goes straight to them. They are a tax write off for me. It's not a big consern. But the hoops the software compaines expect you to go through just seem silly to me. This is why many people use [k]'s of plug in's they've already bought. I think the [k]'s society out there looks at it like a modern day boston tea party, but a lot of people aren't as responsible as the next. I mean, what's easier: Downloading a demo, installing it, clicking the "demo" dialog pop up, all to get a plug in that spits out random blasts of white noise so you can't fully demo the item, orrrrr, downloading the [K] and throwing it in your DAE folder and trying out a full (most of the time) working version?

Anyone got any good guess' on how much it costs and where the funds are mostly spent?

Man, where's Erik when you want him to hi-jack your thread?

I totally agree on this point. I think it's easy to feel almost penalised for purchasing a plug-in. Even for the plug-ins I legally own, when I'm freelancing, is it reasonable for me to have to de-authorise 15 plug-ins from my own machine, turn up for a job to spend an hour re-authorising the studio's mac and another taking them off? Of course not. As you suggest above, I'm going to take the easy route. And at the end of the job, it's not unlikely the client will tacitly expect me to leave these on his mac. So pervesely I end up giving away something I actually paid for!?

Going back to your CD analogy, this is like only being able to play a CD on the CD player in my living room and not in the one in my kitchen because I can't generate, say, a challenge-response code for a second machine. I've spent £500, the license belongs to me - not my G4. Logic got this right with the XS key and 3-month registration deal - I just pull it out of my hub and stick it in the one the other end. iLok could have been as cool, but by and large strikes me as a farce, Digi should have insisted its 3rd Party Developers adopted one standard from the outset. I'm guessing this has been said a thousand times before on this forum (just not by me!).

grudge

My spin on the whole plugin stuff.
I would buy more if they were cheaper. Although depending on how cheap as you go through stages with plugs.
I rarely use channelstrip, Full DUY bundle or McDsp Mc2000 anymore. They were not cheap and to sell S/H I would get 30% of the value if I am lucky...As people have "k" plugins and laugh at you for even buying them in the first place.
Compare this to the price of a Hardware units resale..
Although with BF. I did sell off all my BF plugs as I was sick to death of waiting for them to be HD. They changed over the registration quite simply..Took forever for HD though and I am not looking at going back to BF again..

As a TDM user I am pissed I have to pay upto double for a plugin. Why? They say it is harder to code for PT.
Or is it just because someone who paid only US$600 for Cubase will not pay that much for a plug.
Although if someone pays $15k for a TDM system they have money to burn and should pay us more.
I mean the Sony plugs were released for TDM first so shouldn't they be cheaper or the same as the TC stuff. As they would of then re-engineered the TDM to work on TC... But no TDM costs more as they think we are loaded

The other pain in the ass is every upgrade we do to our PT systems we have to pay for the plugin upgrades from some manufactures. (some are cool like McDsp and Sony)... I mean some manufactures have not updated the plugins for a while apart from just PT upgrades, No added features just a few hundred of every user on each upgrade. HD now PT6.
Although if you stay down on a old system and upgraded every second time you get hit only once.. Why is this?

Don't get me wrong, free enterprise is free enterprise. But here's the real zinger besides the double cost of TDM plugs...No AU support in OS X. So, Digi has provided developers a way to keep their costs up for Pro Tools users while sacrificing customer service. I'm very wary of companies that put developers before customers. The parallel has been made before that Digidesign is like Apple because of the proprietary hardware. I think this is a mistake, it is more correct to connect them with Microsoft. They seem to be shifting toward a licencing model. Plug in developers will pay Digi money for the chance to sell their plugs at double cost.

BTW...my guess on the development...a lump sum for a consultant who is respected in the audio field and can tell what sounds good and understands math enough to propose the algorhythm. Then, two months of a software engineers salary. Finally a licensing fee to whatever engine it will be on.

I actaully do not mind the I-lok, If I want to move around I just take it with me. I have had 2 that died on me and had plugs out of comission for a week both times, that sucks..
The whole problem with copy protection is, next week it will be cracked. I would love to see a break down on costs for a plug.
How much more are we changed for R&D for copy protection?
A lot of plugins are brought straight over the net, no packaging or boxes and they cost the same?

The prices are higher for plugins as there are a lot of cracks!
If the level was 100 cracked for every one sold, it would come way down if the plugins were cheaper.
So we pay $500 for a plugin, if they cut the pirate rate down by even 20% as it was cheaper.
Then there would be 20 people buying the plug at $50 would make then $1000 instead.. Double profit.
How many would buy plugins if they were only 10% of the cost they are now.

The response you get is well there is not the market to buy plugins, but the next breathe they say there is over 100-1 in cracks. So what is that market then.

I just cannot understand why plug manafactures just do not think this.

Research and Development is only HALF the battle. When it comes to any product, marketing is one of the most costly aspects. Between advertising in industry magazines, flying out to conventions, shows, local demos, etc. Plug-in manufacturers or any manufacturer of any product spends a great deal of money getting their product branded in the minds of curious consumers.

The great thing about this though is that if you're lucky enough to put out an incredible product from the beginning, and lucky enough to have had enough money to market it well to get your target demographic's attention, the next time you put out a product you don't have to try so hard.

Then again, there's something to be said for companies like Coca-cola--the leading soft-drink company, still spends more money on advertising than all of their competitors.

I was attempting to compare R&D costs of a plug in to the costs of making a record. Records have to go through the marketing thing to the Nth power compared to a plug in designer. Esspecially with music video budgets alone in the 6 digits. Sorry if I was unclear.

Oh that's quite alright. I was just making a very general statement on the topic.
BTW I do agree.

The main problem with plug in cost is that if you price something low then people assume that its no good. Our sluttiness is really hurting ourselves.

Funny. snapCASE is a lawyer now.

This is SO TRUE!!!

I am guilty of this myself, as are most i know, maybe except for Harvey Gerst.

Reminds me many years ago when Cadillac first came out with the Seville. It was a smaller car than their other models, and cost less to make. So they priced it a little lower, and guess what... nobody bought it!

So then they changed their pricing and made it their MOST EXPENSIVE car, and it became a hot seller!!!

Setting studio rates can be the same way. Some clients won't consider you if you are too far below the high end prices.

mmmm, interresting thread.

Surprisingly, the dsp R&D part of the plugin is not necessarely the most costly part of the production process. To give you an idea, it took something like one year/man to develop the core libraries of our plugins, which include the GUI part, the multiplatform and the multiformat support, and some basic dsp elements.

It seems hard to me to compare two very different markets, with different costs, number of potential customers, and product types (when you buy a plugin, you also buy a service).
It is already hard to compare hardware and software... so comparing software and record industry...

I think the interresting question would be : how one can price a plugin?

At the opposite to hardware, when a plugin is designed and built, that's it : no more real production cost. Duplicating a plugin is nothing, not like building a second piece of hardware.
At the end, there is no difference between a cheap and a hi end plugin. It IS programmed. So the more you sell, the more money you earn, what ever is the price you choose. A hardware has a minimum cost, which is the time to test individual units, if this happen to be the case, the time to built it (especially if it is hand made), the price of the components...
In this focus, a plugin is closer to a record, as most costs in the making of a record occur before the duplication process.

I agree with the general idea that good plugins are usually too expensive. And it's with this idea in mind that we created Ohm Force.

I think we have some brilliant dsp and gui designers in our crew, and create hi quality products (try to find a better software filter - not equalizer, filter, ala sherman - than the quad frohmage, or a better delay unit - not a simple tap delay, a creative delay unit - than the ohmboyz), that do not imitate old hardware stuff.

But our aim was to let everybody use hi quality effects at low prices. That's the reason why we had one version of our plugins that costed $10. We also thought that we might sell more plugins at this price (as Messiah thinks), and finally earn enough money to survive. (at this time we were only selling via internet)

The first thing we realized, is that we sold roughly 4 times more $10 plugins than $80 plugins (which is still a fair price IMHO), so we had more clients (and so more support to do).

Then came the retail distribution time. Distributors usually don't want to have such a competitive priced internet product compete with the retail version. So we had to remove the $10 version, and create a free version (which is not a plugin, but a stand alone application).

At this time, the retail distribution is in progress, but still not achieved, and our price policy has changed. What do we see? That we are selling more and more plugins, even if they are higher priced, and that we are earning more money now that at the $10 version time. (but still not enough to get paid decently)
And the quality of our plugins has not changed!!

A good example : i was at the winter NAMM show this year to demonstrate our products. One guy came to see me, and asked for a OhmBoyz demo. I did my duty, and at the end the guy told me : "well, the delay sounds even better than before. Congratulation for the work!!".
Of course he was wrong (but i did not tell him :o) . The same products, 8 time more expensive, that's all.

That's why i think it is very difficult to price a product like this, because the price is SUPPOSED TO BE RELATED TO THE SOUND QUALITY!!!
I don't want to give names, but there are highly priced vintage synth emulators, from very well known companies, that have aliased oscillators(which is indeed a huge problem when you want to emulate analog oscillators ) !!
And i don't even try to analyse WHY people are buying that, it would be depressing for everybody.

cheers all,

Jerome

lol....

This calls for a 2600 websearch!

I have a considerable amount of experience with software development. There are many factors involved, depends on the complexity of the plug-in and the size of the market.

As Ivory Force said, R&D costs can vary widely. If you want to write a Flange plugin, that's one thing. If you want to write Joe's Super Mastering Better Than Hardware Plugin, that's quite another matter.

The real cost of software development is salaries & overhead. Put two programmers on developing libraries for a year. You just spent $200k or more (if they're worth a ****). Maybe they're the owners, in which case they do it on spec, but expect an equivalent return.

Then (again depending on the size of your shop) you are paying artists to design GUI's, testers to debug and test on various hardware configs, marketers to advertise, technology royalties (if you licensed some part of your code or engine), ISP's, Domains, and Secure Web Ordering... man the list goes on and on.

And don't even think about putting a retail product on the shelf, or else you enter an entirely new strata of cost, complexity, and liability.

Anybody can start a 1-man garage shop and kick out shareware plugins, some are even pretty decent. But just like record production, you need to step up to the plate with the big boys if you want to really sell massive units. Or be some sort of genius with one helluva lucky streak.

Software is software.

And getting retail space is the same royal PITA for
software as for music.

A lot of the pricing comes down to market size.
I haven't seen solid, audited numbers, but I can't believe
that there are more than tens of thousands of copies of
ProTools being used by pros. And probably tens of thousands
of copies of the hobbist tools (Logic, Sonar, etc.) actually
being used by people likely to pay for plug-ins.

Lots of the gear that gearslutz lust for is sold in
quantities of hundreds of units per year. Is there enough
of a market to be worth all the effort?

Say I could solve the deinstall/reinstall all your plug-in
problem, so that you, the person, have all your licenses
legal and the vendors happy. This would solve a problem
mentioned earlier, I believe it is a real problem.

If the solution costs $5,000, it is likely to be worth it for
serious traveling pros. Would I sell 100 copies?
If so, there is no way I can make money on it.

Interesting. People worry about the cost of a couple of U87s,
some ribbons, preamps, etc. Things that will last, with
some care, for ten or more years.

In the software business, the workstations, compilers,
tools, etc. are useless in a year or two, and can easily
cost $25K per engineer per year.

I believe that a real solution to the music DRM issues should
be able to address software sales/rental as well.
The same solution that works for pop hits should work
for plug-ins. But that is another thread.

I bought the Waves TDM bundle in 1999. Last year I paid additional $400 to go from 2.3 to 3.2. It has not completed a year and now if I want to go to 4.x I have to pay again. from 2.3 to 3.2 they improved the RTAs thing, but nothing completly different in terms of quality. They added a de-esser to that bundle and so.
I boughtit on the web.
I am allowed to go to 3.5 and to 3.6, better chip usage I think.

So we need to pay to go OS X compatible, than to PT 6 and so.

Maybe I am stupid or too smart, but this plugin issue is becoming out of question to me. Have you guys imagined if any of these companies are sold, go bankrupt? from where will you get your challenge/response codes?
Also, at least in my case, that live quite far. If the ilok gets ****edup friday night, how long to arive a brand new one at your door? Oa, plugs shall go to demo mode. But will there be enough time to release the new one?

>>Have you guys imagined if any of these companies are
>>sold, go bankrupt?

Software companies go bankrupt all the time.
I've been in two in the past five years...

If your professional capabilities require
tools that may disapear, then you can't
deliver to your clients.

The costs of "maintenance" of software has
to be factored in to any purchase decision.
While the software won't wear out like
brakes on your car, as Alécio said,
changes in hardware, operating system,
or other tools may require updates.

We are lucky, some purchases, like a U87i can
be one time charges lasting for years or even decades.
Even consoles and tape drives have long lives.

Software is totally different. You have to factor in
the yearly upgrades, revisions, droping of the product,
and bankruptcy of the vendor. Sometimes you
have to change something like the OS to keep current,
and that requires that you throw out your hardware.

That $300 plug-in package may easily cost $1000
when you step back and look

yes, fishtop. They keep upgrading and so.. very little improvements, new OS, new windows, new machines ( PC/MAC) and so.
$1100 for a TDM bundle, then plus $400 for going to 3.2, now more XXX.
They also have to pay their workers, programmers and so and everyone gets happy, from Apple to Digi to 3rd party team.
I know this might not be lot of money for you pro guys living in very estable solid economy countries but for others it is a nightmare of expenses.
Upgrades are not investment to gear, they are added expenses.

It is a lot of money to anyone.

>>$1100 for a TDM bundle, then plus $400 for going to 3.2,
>>now more XXX

My point exactly. Do not be seduced.
The price of a TDM bundle is not $1100.
It is probably more like $3000 to $6000,
as you are already up to $1500 and have no
end in sight. When Apple converts over
to Intel chips, you'll even get to throw away
$3000 worth of computers.

It is marketing fluff that digital effects are lots
cheaper than the old analog stuff. It is not
even clear that digital stuff is more reliable,
there are a lot of LA2s still in use.

planned obsolescence.. For example, my 02R V2.. I paid around $10,000 for a console with a meter bridge and 3 CD8At slots. Now you find them under $3000. And it has passed only 6 years.

PT stuff, digital gear in general.. very bad deals/business to us..
consumers...

the problem of the changes in operating system and so on... is a big drawback of the software solution. It's just like saying : i switched to a new mixing console, so now i have to change all my gear because the cables don't match anymore.
i agree it's not good. But in the other hand, it is impossible to put the EQ of your old neve in your new ssl : it's the same problem with any integrated solution. If you change the box, you'll probably have to change also what's inside.


But there is something else to take in account when you want a new piece of software : the price policy of the company.
Some companies will make you pay for any minor upgrade, which is not fair, because you pay for bug fixes.
As bugs are inherent to software, a bug fix should be free.
OTOH, a major version change comes usally with new functionality, which seems logical to pay for.

And for the plugin case : when you buy, say, a new comp plugin, you don't really buy one comp, because you can use more than one instance. i know it's an old argument, but it emphasize the fact that both solutions have pros and cons...

Ok, then a better argument : try to throw your best mic on the floor once, and we'll see if it lasts for years... isn't it a good argument?