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Terapeak Trends: Retail Box Tax Preparation Software Still Hot During Tax Season

By Aron Hsiao  on February 27, 2014

Tax season is here again. With it, as always, comes endless hours spent grappling with complicated software packages and piles of official documents and receipts. In recent years, many of the biggest names in tax preparation software have begun to serve customers entirely online, in the cloud—but we wanted to see whether a market still existed for boxed tax preparation software on eBay.

Tax season brings on a mad scramble for software to make taxes easier. (Image: ©Nicola_Del_Mutolo / Fotolia)

To find out, we used the data in Terapeak for eBay, starting with the category breakdown for the keyword "tax software." This told us that 99 percent of all matching listings were in a single eBay category:

Computers/Tablets & Networking > Software > Personal Finance, Tax & Legal

The fact that sellers almost universally place their listings for tax preparation software in this category gives us a fairly easy way to study how sales for such software performed last year, and how they're playing out so far this year.

Two-Year Trends, Tax Preparation Software

The two-year trend view for both dollar volume and for sold listings shows us that there is indeed quite a boom in sales of tax preparation software just before tax season every year:

The two-year category chart makes it easy to see when consumers do their taxes

Sales in this category are flat throughout much of the year, but between the start of December and the end of January, sales volume grows to a peak approximately 10 times its normal rate, with listings sold growing to a peak approximately 5 times its normal rate. Both begin to taper off after the first week of February, indicating that contrary to popular wisdom, most don't wait until the week before taxes are due to begin, but rather begin to invest in finance and tax preparation software to make the process easier some months in advance.

Top Searches, Tax Preparation Software

The top searches associated with "tax software" also tell us something about consumer tax preparation behavior and the market for tax preparation software. The major brands being sought include:

  • Intuit's TurboTax

  • H&R Block's tax suite (formerly TaxCut)

  • TaxACT

Shoppers appear to know these brands and to search for these products by name: TurboTax, TaxCut, and TaxACT.

More interesting is the fact that eBay is clearly a marketplace for prior years' versions of common tax and finance applications. Every year from 2008 to the present is represented in the hot searches list, suggesting that there is a latent market on eBay for tax preparation software to aid in the preparation of prior year returns or amendments still owed.

Tax Preparation Software by Year, Past 90 Days

To see just how much prior-year tax preparation software is being sold, at least on a relative basis, we did a search for the major brands of tax software and an associated year edition, going back 90 days, covering the years from 2008 through 2013. Here's what we found:

Year Sales Items Sold Average Price
2008 $9,317 268 $34.77
2009 $14,485 509 $28.46
2010 $19,089 794 $24.04
2011 $28,109 545 $51.58
2012 $64,299 3,168 $20.30
2013 $1,099,520 19,416 $56.63

In terms of dollar volume, the current year dominates the list, but in terms of items sold and average selling price, there are interesting bumps in some numbers at the two- and three-years-prior marks. This is likely because present-year editions and previous-year editions are easy enough to come by in retail channels—but the two- and three-years-prior products are new enough to still be at issue for many, yet old enough to have made their way out of retail channels.

It should also be noted that these numbers may overlap to some extent—many "prior year" versions of tax preparation software released after the fact are designed to cover multiple years.

Taken together, however, these numbers show that despite the rise of cloud-based tax preparation, finance, and accounting software, there remains a healthy market in online channels for retail box versions of these applications, both for the current year and for years that have already passed into tax history.

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