I guess the moral is that as long as people fall for it companies will continue to take advantage of the public's innate desire for "a great deal."
Off topic, but am I the only person that finds it annoying when company blogs don't provide an easy link back to their website? I understand wanting the header logo/name to lead to the blog homepage, but it still seems sensible to include a good link somewhere.
Edited to show the on-topic stuff first.
This goes for every fast-food combo meal, as well. IME it's just a dime or so off the a la carte sum.
As for the market intelligence, we're not a data provider. Actually, this is the first post we've ever written that surfaces any of the data we have. We have a data set that is pretty uncommon.
Market rates for local services are generally very opaque. We think the data we have on market rates for local services can be helpful in many ways (like this) to consumers.
Thanks for reading!
p.s. I'm Sander (thumbtack.com/who)
It's a beautiful psychological play. The % off, the timer, the social pressure - an automated version of the used-car salesman pitch. It doesn't matter what the absolute price is - studies have shown the consumers are more willing to buy a product that is at its "everyday low price", even when it's that price... every day.
In fact, I wouldn't be surprised if the deals had special "Groupon only" pricing. Gilt Group went through this a few months back with their "Made for Gilt" specific items - they were selling inventory which had ridiculously inflated "retail prices" pulled out of thin air.
Advertising costs money so whenever something is "advertised" you're going to pay more unless the advertising generates enough business to get an economy of scale greater than the cost of advertising. Advertising makes a lot of sense when you have something with high capital costs but low per unit costs. (Think CPUs or software based businesses). When you're buying a service such as cleaning where most of the costs come from labour it's going to be difficult to generate an economy of scale great enough for advertising to pay for itself. In businesses with out great economies of scale the increased cost of advertising is going to be passed to the consumer.
You're always going to get a better rate on a service business by doing a little leg work yourself and cutting out the "middle man".
Sensible Groupon offerings don't have to make money, or even fail to lose money. They just have to do so within the bounds of a marketing budget, and provide a better ROI than what the budget would have gone to otherwise.
The amount of money a rational organization should spend on negative ROI activities is exactly zero. It's just as stupid to spend your money on a -25% ROI as it is on a -50% ROI, you'd be better off putting the money in a GIC.
So if you set aside a 10k yearly advertising budget, offering deals which make you lose 2k is perfectly reasonable - if you think the exposure and new customers are worth it. The advertising budget is already accounted in the yearly ROI, so you don't have to worry on each deal's bottom line being in red.
For the service industry in particular, hourly rates can vary drastically by geography and type of business, whereas for spas, restaurants, or other store-front businesses, it's clear whether or not you're getting an actual deal/coupon because you can compare the deal to the base menu or pricing packages.