That damned coupon code field. Where's Google?

There seems to be this indie Mac shareware mafia (of which I am sadly not a member — they seem to be doing quite well thank you) who all blog like crazy, recommend each others’ products, and make extensive use of coupon codes. Godaddy also uses coupon codes a lot, and it’s gotten me to wondering if these actually work.

Here’s the deal: if I’m about to buy some piece of indie software for, say, $20-80 (most seems to fall in that range), and there’s a little “please enter your coupon code for a discount” text field there, my immediate reaction is to Google for coupon codes. If I find a “really good” (something which gives me at least a $10 or 25% discount) code then I will most likely use it and buy the product (I was planning to anyway, until I saw the coupon code field). If I don’t find it then — and this has happened to me several times now — I almost always decide not to buy the product.

To my mind, the message coupon code fields send me is that the quoted price is for suckers.

I discussed this with my wife — who is an expert, if not the expert, on online persuasion (seriously — she’s published a bunch of journal articles on the subject) — and she agreed that the net effect of coupon codes may in fact be negative. Of course it may also be positive. The point is that it’s not an unalloyed positive. My guess is that if you’re marketing to idiots, all bets are off. But the kinds of software I’m talking about are generally being marketed to software and web developers (people who buy bulk domain names or version control software are probably not complete internet newbies).

It’s a bit like cell phone pricing. Once upon a time I’m sure the “free” cell phone with the incredibly expensive plan you couldn’t get out of actually fooled people. But by now most cell phone buyers are probably doing the math (my phone will cost me $A + 24 x $B). It certainly looks like Google has reached this conclusion with the Nexus One.

So, on the whole, I don’t know, but my thinking is that coupon codes are basically a Bad Idea. Let’s break it down:

The person you’re selling to is either “peripherally processing” (i.e. making an impulse purchase) or “centrally processing” (they’ve thought long and hard and weighed the alternatives). In the first case, a coupon code field runs the risk of interrupting the instant gratification and giving the customer time to think. Hmm, I could get this cheaper? There are discounts I’m missing out on? I wonder how much alternative products cost? In the latter case, you’re virtually guaranteeing that your customer will go searching for coupon codes and possibly decide to delay purchase (especially if they find evidence of really awesome codes having been offered in the past).

Let me give you two concrete examples from my own experience.

When Versions (a graphical subversion client for the Mac — it’s really quite nice) was getting a lot of buzz, I tried it out. I was pretty much going to buy it when I saw the dreaded coupon code field. I did a quick Google for coupon codes and came across some expired coupon codes and a bunch of discussion of Versions vs. Cornerstone (another graphical subversion client for the Mac — in my opinion it’s even nicer). So I switched to Cornerstone for a while and pretty much decided to buy it instead. Again with the dreaded coupon codes! I Googled for Cornerstone coupons and discovered some really good ones I had missed out on. So I decided to wait until a new offer showed up — I really think both apps are kind of overpriced, but then they have a smallish target audience — and look for free alternatives or see if I could stomach using svn from the command line instead. Eventually I decided to buy Cornerstone after finding a deal on it you get for joining some website. (I’d link it if I could remember it… if someone posts the link in a comment I’ll add it.)

By the way, TortoiseSVN — free and open source — under Windows is pretty much superior to anything you can buy for the Mac (Cornerstone is better in some ways, but if I had the equivalent TortoiseSVN for the Mac I would happily live without Cornerstone).

Another trendy indie Mac program is Things — a to do list manager developed for folks who (unlike me) subscribe to GTD but well-designed enough to be useful to people who do not (including those — like me — who can remember when pretty much the same principles were called The Seven Habits of Highly Effective People). I used Things from when it first came out in public beta, and just before release I got a special coupon code for beta testers. (If I recall correctly, GTD stands for a complicated German word meaning “pay way too much for to do list managers”, and one of the “seven habits” is paying too much for paper calendar refills.)

My immediate reaction to this was “they’re going to sell this sucker for $50?” I can’t remember how big the coupon code discount was (I checked, and it was only 20%), but even the discounted price seemed unreasonable. I can understand when a program like Cornerstone — which doesn’t do anything terribly clever, but does it well and attractively and is targeted at a pretty narrow audience — is a bit overpriced. I may not like it, but I can understand it. But this is a freaking to do list manager. Even when I was using it for free I contemplated writing my own replacement, but figured “hey, my time is worth more than this”. What’s more, the coupon came with a strict time limit, which said to me that the developer wants to force us all to pay really quick before he/she reduces prices to a sane level. Now, amazingly enough, Things is still priced at $50. But that was my reaction to the coupon code deal, and I have cheerfully lived without Things ever since.

Incidentally, Remember The Milk is a freaking awesome web-based to do list manager (free, or $25/year for premium — I’m using free mainly because no compelling premium features have been added so far). It doesn’t have some of Things’s clever UI hackery (essentially you can hit a keystroke anywhere and quickly add a “thing” to remember to Things, which is probably its single best feature), but it does solve a much more important problem which Things conspicuously fails to, which is that you can get at it from anywhere without syncing. I would never have found RTM if Things had been priced at $25 instead of being offered at $50 with a coupon code for 20% off (valid until January 15th 2009), so coupons are good for something.

So my advice to software developers is to give up on coupons and charge more reasonable prices. If you want to use “scarcity” simply offer time limited discounts (the way Martin Wengenmayer, developer of Cheetah 3D does). That way you’re not encouraging impulse buyers to Google for better deals and cheaper or better alternatives. My advice to everyone else is to never buy a product with a coupon code field without finding a coupon code (using Google). Retail is for suckers.