Last week I purchased a Groupon for a new Crossfit gym in town. I told a friend to buy one also and soon, because they were selling out. She said, “Oh, I’ll just call the gym and get the same discount without Groupon when I’m ready.” I asked her what she meant – would the gym do that? “If they are smart,” she replied. “They will actually make more money because they won’t have to pay Groupon all of the fees.” You know what? She’s right.
How I saved $114 on Groupon deals without using Groupon
After a little research, I learned that the classic Groupon deal requires a discount of 50 percent, after which the merchant and Groupon basically split the revenue (after the merchant pays the credit card fees and waits around for its check). Ultimately, merchants make about 23 cents for each dollar after discount and fees.
For example, a month of classes at Hank the Hulk’s Crossfit Gym (sounds legit) sells regularly for $100. He sells a Groupon for a month of classes for $50. Groupon gets $25 from the sale. Hank the Hulk then pays credit card fees and goes home with approximately $23.
If I make the same purchase directly from Hank the Hulk for a month of discounted classes, I will still pay $50. But Hank the Hulk gets to keep the entire $50. That sounds like we both win, right?
But would merchants be up for it?
I chose three different local Groupon offers and asked if they would offer me the discount directly.
Groupon Deal #1: $25 for a painting class for one ($50 value, $12.50 in merchant savings)
Groupon Deal #2: $9 for three Groupons, each valid for $6 worth of baked goods and coffee ($18 value, $4.50 in merchant savings)
Groupon Deal #3: $45 for 10 yoga classes (a $125 value, $22.50 in merchant savings)
All three merchants were very different, and all three agreed to my request, for a total savings of $114 of services for me, and $39.50 saved in Groupon fees for the merchants.
Obviously, not all local merchants will be up for this. And I did not attempt to contact companies with national Groupon deals. For those instances, here are a few tips for how to use Groupon.
Happy deal hunting!
Has a company ever honored you a discount without a coupon or deal?
Hmm, sounds a little unethical, the merchants are cheating Groupon out of their fees. Without Groupon’s advertisements, you may not have gone and visited those merchants in the first place, and the merchants wouldn’t have gotten any revenue from you at all. If the merchants are smart, they’ll just write off what they pay to Groupon as an advertising expense, so they won’t be losing that much money. Advertising is a cost of doing business, and Groupons seem to be a more effective way of bringing in customers that other forms of advertising. I’ve heard pluses & minuses from merchants regarding their Groupon experience. Some think it’s not worth the hassle, while others like how it brings in new customers that might not have otherwise visited the establishment. I would just go ahead and buy the Groupon. I’m not sure what repercussions, if any, there would be if Groupon found out that a merchant was offering the same discount to non-Groupon customers.
100% unethical. This line is the thesis crux of the argument: “merchants are cheating Groupon out of their fees. Without Groupon’s advertisements, you may not have gone and visited those merchants in the first place, and the merchants wouldn’t have gotten any revenue from you at all. ”
Damn straight. I’m not going to visit dozens or even hundreds of official company websites in a day to see if they “might have” a deal. Groupon has the best of everything: Local, Goods, Coupons & Freebies, Getaways, Reserve, Seasonally Themed Discounts…
GRPN kicks major @$$. Unfortunately Wall Street doesn’t know it yet. (29) deals for me bought in (7) months. EBAY & RetailMeNot we hardly knew ye. One positive sign is the merchant participation seems to be increasing heavily. Coupons.com & Amazon are beyond overrated. Groupon = free shipping on all items $19 bundled or . Really hope they get the credit they deserve someday which is way overdue.
Their latest commercial is comedic genius & non-offensive. Haven’t laughed that hard@a retailer’s sense of humor in forever…
Bargain Babe says
@trondisc You’re right. Groupon essentially provides advertisements for businesses and take a cut of the purchase as it’s fee.
I’ve never found the Groupon terms so onerous that I’m dissuaded from purchasing one. And I’m not so gung ho that I would want to call a business and negotiate the terms myself. Seems easier to just get it all in writing and paid for with Groupon. I have bought two groupon (luckily with refer credits) that I never used, which is disappointing. But I’m not disappointed in Groupon. I’m the reason I haven’t used them. Both are far from my house.
As for the commercial – are you talking about this one? https://www.youtube.com/watch?v=0RLZiB19ZXQ
It’s the only commercial they’ve released since their controversial 2011 SuperBowl ad, which you can view here: https://www.youtube.com/watch?v=zJ3Rk4PLme4
But it doesn’t strike me as comedic genius. Are we talking about the same commercial? Please post a link if I’m not sharing the one you’re talking about.
Megan Thode says
Great points, @trondisc! Thanks for your input!
I’m curious about what commercial you are referring to as well. Link?
I agree with you.
Megan Thode says
Great perspective, @Ron! I have heard mixed feelings from merchants regarding using Groupons, too. And from consumers alike.