TurboTax has run a huge number of ads, which cost millions of dollars, to promote its Absolute Zero Tax, $0 Federal, $ State filing product, for people who use the 1040-EZ-A filing system. Is it free? Yes, but a business school professor would say it is a smart free, at least as far the Intuit’s (NASDAQ: INTU) TurboTax product managers are involved.
The system TurboTax created for the free filing most likely did not cost them much time or effort. They are already in the business of creating filing documents. That leaves their cost of doing business small.
The money TurboTax may make is in the up-sell. The free product is a favor. It may begin the product of brand loyalty. When people need related products later, TurboTax may keep those customers. TurboTax said as much when it explains to customers the purpose of the program:
There’s really no catch. Millions of our customers have already filed absolutely free.
We’re investing in you, by giving you the power to do your own taxes and take control of your finances. We’re here to help—now, and in the future. So, down the road, if you buy a house, sell investments, or have big life changes, you’ll be really comfortable doing your own taxes. We hope you’ll choose one of our reasonably priced products like Deluxe or Premier to help you get your maximum refund, guaranteed and your taxes done right
TurboTax has four other filing systems–Deluxe for $34.99, Premier for $54.90, and Home & Business for $79.90. Once again these products were created before this year. The cost to provide them to customers is close to zero.
Is the zero cost, free filing product really free. Yes, unless the customers upgrades
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