Coupons are a form of market segmentation, which generally aims to extract surplus money from those customers who will pay more (for whatever reason - don't care, don't know any better) while still extracting some money from those who are price-sensitive.
The cost is the trust and goodwill of your customers. People will feel cheated if they find out and hopefully leave you for a competitor who doesn't impose on them the additional mental cost of searching for coupons, finding price engine links with lower prices(#) or whatever.
(#) Some shops actually do that - you get a better price from a price comparison engine than if you search from shop's own site. Talk about treating your trusted customers well.
This comes at a cost though, see this classic by Joel Spolsky: http://www.joelonsoftware.com/articles/CamelsandRubberDuckie...
The cost is the trust and goodwill of your customers. People will feel cheated if they find out and hopefully leave you for a competitor who doesn't impose on them the additional mental cost of searching for coupons, finding price engine links with lower prices(#) or whatever.
(#) Some shops actually do that - you get a better price from a price comparison engine than if you search from shop's own site. Talk about treating your trusted customers well.