Intuit Cuts Pricing, Kills QuickBooks Basic

Thursday Sep 29th 2005 by Lauren Simonds
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The company says competition from Microsoft is not a factor, claims better customer experience is the only motivation.

When a new player enters a market, the resulting competition almost always benefits the consumer, either through the introduction of a product that's better than what's currently available or through price drops that make a venerable product even more appealing.

Case in point: Intuit has announced it is cutting prices on its upcoming 2006 line of QuickBooks accounting applications and, at the same time, eliminating QuickBooks Basic from the line-up altogether.

While Intuit acknowledges the presence of Microsoft Small Business Accounting and Microsoft's overall market influence, it had no impact on Intuit's pricing decisions. Brad Smith, general manager of QuickBooks said, "We're very aware of market dynamics, but we're focused on doing the right thing for our customers."

"Doing the right thing," in this instance, involved two main changes. The first was simplifying the product line. Through customer research and feedback, Intuit found that customers were confused when trying to find the QuickBooks accounting product they needed.

"Customers spent quite a bit of time trying to choose between our Simple Start, Basic and Pro versions," said Smith. "What we found is that there wasn't enough differentiation between our two entry-level applications — Simple Start and QuickBooks Basic."

According to Smith, Intuit sold over 85,000 copies of Simple Start in its first year. "In retail sales, Simple Start outsold Peachtree's combined product line," he said.

Intuit also had research numbers that showed Simple Start customers recommended the program to family members and friends twice as often as did QuickBook Basic customers. "We wanted to simplify the customer experience, and it became clear that Simple Start was the stronger entry-level product."

The second change involved eliminating Intuit's mail-in upgrade rebates and simply offering all customers the lower price without the attending hassle. Again, Smith points to Intuit's intensive customer focus.

"The changes we make are based on significant feedback from our customers," he said. "We call it customer-driven innovation. What we found is a big pain point for people when they upgraded from one QuickBooks version to another. They didn't like the hassle of the rebate process to save $100."

2005 Pricing
2006 Pricing
Simple Start: $99.95 Simple Start: $99.95
QB Basic: New: $199.95
Upgrade: $99.95
QB Basic: Eliminated
QB Pro: New: $299.95
Upgrade: $199.95
QB Pro: $199.95
QB Premier: New: $499.95
Upgrade: $379.95
QB Premier: $399.95

Intuit has eliminated the upgrade rebate process altogether, and all customers will be able to purchase QuickBooks products at what would have been the after-rebate price (or close to it in the case of the 2006 Premier price).

Smith said that the 2006 line will launch during the first two weeks of November, although resellers are taking advanced orders now.

Lauren Simonds is the managing editor of SmallBusinessComputing.com

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