The life and times of Zack Weinberg.
Tuesday, 4 February 2003
# 6:45 AM
The pricing model for tax preparation software is ... bizarre. Assuming you're going to use such software at all, and assuming you're not so lucky as to live in a state with no income taxes, you need the program to do both federal and state paperwork. The program isn't very big; you could easily fit everything on a single CD. It would seem natural to sell it all in one package.
This is not done. Instead, you buy the federal and state programs in separate boxes and install them separately; the state program then turns out to be a bolt-on module for the federal one. And, here's the really weird bit, you find a coupon in the federal box offering you a rebate of the full purchase price of the state package.
I don't understand the economics of this. It has to be more expensive to package and distribute the state program separately, then collect and process rebate forms and mail out checks, than it would be to bundle the state program onto the same CD. I can only see it being profitable if the majority of customers don't bother to send in the rebate forms, but the sort of person who buys tax software is not the sort of person to pass up a rebate, even if it's only for $20.
It gets weirder, because there's several variants of the federal program. That in itself makes sense: some people have more complicated taxes than others, they want more help, they'll pay more for it. Yet in the box for the midrange program that I just bought (having mildly complicated taxes) I find a rebate coupon which will knock its actual cost down to the same point as the cheapest alternative. I boggle.
Let's not even talk about the pile of advertising flyers that took up most of the volume of both boxes. Ugh.