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The Gripe Line
Ed Foster

Twist in Intuit's crippleware techniques doubles the cost of its tax-table service

SOFTWARE MARKETEERS would do well to study the saga of QuickBooks and its zeroed-out tax deductions. It provides a textbook example of the creative use of crippleware to squeeze some extra dollars out of customers.


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To understand the final twist Intuit has written into the last chapter of the QuickBooks story, we must first review what's happened previously. On Feb. 15, 1999, many QuickBooks 6.0 customers were startled to find their tax deduction data for payroll checks had been zeroed out. To have the program continue calculating the deductions, QuickBooks users were required to subscribe to Intuit's $59.95 tax-table service to get the latest federal and state updates. The user could calculate and enter the deductions manually for each check, but every month QuickBooks would again zero out the data.

Some QuickBooks users, particularly very small businesses with a handful of employees, felt the crippled payroll feature was intended to force them to sign up for a service they didn't need. Intuit officials argued it was all for customers' own good; that is, without the tax-table updates, users risked being penalized for missing changes to the tax regulations. But Intuit's argument seemed hypocritical, particularly considering it did not guarantee the accuracy of the updates. Even tax-table service subscribers were ultimately responsible for checking that they were in compliance with new withholding regulations; they were essentially paying an extra $60 per year just to have a basic feature of the program actually work.

QuickBooks has continued to zero out payroll deductions for customers who have yet to subscribe to the tax-table service. Last year the cost of annual subscription, now called the Basic Payroll service, crept up to $72. But as tax time rolled around this year, The Gripe Line once again heard a chorus of complaints from QuickBooks customers who felt they were being squeezed. And that certainly seemed to be the case because the price of the Basic Payroll subscription shot up to $129.95.

"Their letter doesn't even attempt to justify bumping up the price by 80 percent," wrote one reader after receiving a letter from Intuit announcing the new price for the tax-table updates. "They figure they have us over a barrel, and they mean to take advantage of it. I can't believe it's legal for them to do this. How can they charge you an annual fee just so a product will work as advertised?"

"$129.99 isn't going to kill me, but I sure don't like being held hostage," wrote another reader. "And I like terrorists even less. I hate losing a battle, but I'm afraid Intuit has me. I have got to pay. Hundreds of hours are tied up in that accounting. I have no choice. Is this extortion? Protection money, maybe?"

We've heard this before, but one aspect of this year's gripes intrigued me. Several readers who'd called Intuit to complain reported its customer service told them that upgrading to QuickBooks 2001 for $89.95 would solve the problem. The information the readers received was not crystal clear, but the basic message seemed to be that the new version of the program would no longer zero out the user's manually entered data every month. Searching Intuit's Web site suggested this might be the case, as a note in several places said that QuickBooks 2001 users could "continue to use the last payroll tax table received or subscribe to basic payroll."

Had Intuit finally seen the light? It would hardly be surprising that they would avoid being blunt enough to make such a reversal of policy clear -- "No More Crippleware" isn't a slogan most ad copywriters are likely to adopt, after all.

An Intuit spokeswoman confirmed that QuickBooks 2001 does allow users to keep using the tax table that comes with the program. Users who do not subscribe to the payroll service will not have their deduction data zeroed out. As for raising the price of the subscription to $129.95, the spokeswoman said this was done to put Intuit's pricing in line with that of its competitors for similar services.

Cynics might wonder if it was coincidental that the price of the tax-table service was pushed up significantly higher than the price of upgrading to QuickBooks 2001. But it seems like a good way of encouraging the customer base to buy an upgrade some might not otherwise find attractive. It's a clever strategy: First you cripple a product, then you sell an uncrippled version as an upgrade.

Could that have been Intuit's thinking all along? Perish the thought, but it did raise a question in my mind that inspired me to ask the Intuit representative to do some more checking. Sure enough, QuickBooks 2001 will let you use the old tax table, but only in 2001. On Feb. 15, 2002, it starts zeroing out users' payroll deductions again, and our crippleware story starts again. Pardon me, but I've already read this book.

Got a complaint about how a vendor is treating you? Contact InfoWorld's reader advocate, Ed Foster , at gripe@infoworld.com.


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