Red Gate: We could not make the free model work for us as a commercial company

Today, .NET Reflector goes from being a free program to a paid program. Not only that, but all current versions will stop working unless you buy a license.
Written by Ed Burnette, Contributor
If you're a .NET developer, chances are you've heard of .NET Reflector, a decompilation, debugging, and reverse engineering tool for managed code. Originally written by Lutz Roeder, .NET Reflector was acquired by Red Gate in August 2008. At the time, James Moore, Red Gate's general manager of .NET Developer Tools said:

"Our commitment is to maintain an amazing free tool that will continue to benefit the community while seeking input from users on ways to make .NET Reflector even more valuable."

In a sure-to-be controversial decision, the company is preparing to renege on that commitment. This morning, Red Gate Software announced that it will charge $35 for the basic edition of .NET Reflector 7, scheduled for release in early March. According to Neil Davidson, co-CEO of Red Gate,

"We provided .NET Reflector without charge for two-and-a-half years, but unfortunately could not make the free model work for us as a commercial company. Charging this nominal amount – about the price of a tank of gas in the U.S. – will enable us to dedicate a team of developers to make sure that Reflector remains a valuable, up-to-date tool over the long term."

See also: Video with Greg Tillman and Simon Galbraith on the future of .NET Reflector.

I sat down with Greg Tillman from Red Gate's marketing team to get their side of the story...

Next: Why the free model didn't work >

[Ed Burnette] Why didn't the free model work for Red Gate?

[Greg Tillman] We thought that there were two models that would continue to support a free version of Reflector.

The first was some sort of halo effect on the rest of our products. We have some market leading developer tools like ANTS Performance Profiler and SQL Compare. We were originally working on the assumption that the huge volumes of traffic Reflector would bring to our website would mean users would stop and look around our other tools. It turns out that this wasn't the case.

The second model was a typical freemium model which we have been trying to operate for the last 12 months. I.e. a small amount of users buy the premium version of Reflector and support the further development of both the premium and free versions. To be honest, this is not a model we typically agree with. Without heavy handed tactics like removing features from the free product there was no way we felt we could get the conversion rates to where they would need to be to make .NET Reflector a priority for us.

We see these as our problems and although we would like to apologize for being wrong about our initial assumptions, we certainly are not angling for pity. Put simply - we were wrong.

[Ed] What about all the people using the free version now. Won't they just continue to use that?

[Greg] This is a common misunderstanding about .NET Reflector and it is something we have taken a lot of flack for in the two and a half years we have owned the tool. .NET Reflector actually has always had a 6 month expiration date built in to each version. Every 6 months or so you need to update to the next version of the software. A lot of people think Red Gate built that expiration model into Reflector but actually it is the way Lutz had run things for the previous 8 years.

Next: Ensuring a revenue stream >

[Ed] Why build in an expiration date?

[Greg] I wouldn't like to speak for Lutz but the common consensus is that he put that in to make sure he only had to support one version of the tool at any point in time. Clearly for him and for us this always left the door open to the possibility of commercializing Reflector in some way.

The current version of Reflector is version 6.5 which will expire on April 15th 2011. We didn't think this was enough notice for the community so we decided that we would release version 6.6 today along with the announcement to give users access to a free version until May 30th. We are hoping people will use this time to get used to the idea of charging or find an alternative way of solving the problems they used to use Reflector for.

[Ed] Will $35 be enough to fund development or will you have to raise the price later?

[Greg] We want Reflector to remain a mass market tool and so there is an economic reality there that demands a price in this kind of range. We see a low price for the standard version of Reflector as a key component of its future but we would be silly to commit to no change in the price as time goes on.

I think you now realize that there has always been a time bomb in Reflector and what this really means. With forced updates you had update or you couldn't continue to use Reflector. In the new model, however, $35 will pay for a perpetual license of .NET Reflector 7.0 that is yours to keep forever. We are also not proposing that for $35 you get free upgrades to new versions; just that your version is yours to keep.

[Ed] Don't you need some kind of continuing revenue to pay for development?

[Greg] I agree that we need to do more than take just one payment of $35 from each Reflector user to sustain the development of this tool. For starters there will still be the premium version of Reflector with all the debugging capabilities at $95 and we also plan to add a middle edition to encourage upgrades at any time. With three editions to work on and a full time development team on Reflector we believe we can make a sustainable business by releasing new versions of Reflector with exciting new features that tempt enough of the base to keep upgrading (at a fee) to future versions.

Lastly I should mention that only 1/3rd of the world's .NET developers have ever used .NET Reflector. For a tool that has around 20 core user cases we are very excited about investing in Reflector enough to extend its reach to the remaining 2/3rds of the world's .NET developers.

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