I decided to look at our figures to see if it would be financially viable for us to do Groupon, not that I am interested in doing it.
We have all of our fixed expenses ( wages, telephone, internet, accountancy, repairs & renewals, advertising, vehicle insurance and repairs, business insurance etc and variable costs (fuel and materials) on a spreadsheet so we can see to the penny what our breakeven point is per week and from that can calculate our required hourly rate to breakeven point.
We would have to subsidise every hour spent on Groupon jobs by around £13 per hour, that’s a lot of money. Put another way we would be losing £13 per hour on Groupon. Worse still for anyone vat registered, 20% of the money received is vat. Ok, you could up-sell some of them but you would have to do a lot of it to recoup your losses and given that you are dealing with people who have only purchased the coupon because it is so cheap, that may be an uphill struggle. Plus, two rooms and hall is all that most people have done. The argument often muted is that it builds your customer base, I’d argue, no it doesn’t. These people are not your customers; they are Groupon customers and so will probably turn to Groupon for another deal next time around and not you. That makes it a bit of a gamble to hope, and that is all you can do, hope, that these people come back to you a year or two down the track and so recover some of the money lost the first time around.
Someone with a TM would be paying out £5 per hour in TM fuel alone, so even with the added productivity of a TM you’d be better off sitting at home.
The only people who make money out of Groupon – is Groupon and that in my view makes it a mugs game.
Simon