Group Deal Calculator

 GrouponBoomTime Deal
List Price    
Discount % -$50 % -$60
Sale Price $50  $60
Commission % -$25 % -$2
Direct costs % -$50 % -$48
Gross margin per deal -$25  $10
Deals sold, total gross margin -$12,500 $1,530
Redemption rate, breakage % -$1,250 % $153
Immediate profit/loss from deal $  $
Client rebooking rate % 60 % 60
Life time value of new clients $  
Net profit margin %  % 
Incremental profit from new clients $2,820  $2,820
Long-term profit/loss from deal -$9,680  $4,350

Where do our numbers come from?

Groupon's self-reported rate of repeat business is 22%. What we've actually seen anecdotally with our clients' Groupon deals has been a lot less. On the flip side, a well targeted deal with the right offer to the right audience can produce a profitable repeat business rate. Don't expect to make up a lot on breakage: the redemption rates we've seen have been 90% and above. 

Under the Groupon column, we've put the kind of deal we've often seen them recommend to our small service business clientele. Under BoomTime Deals, we've put the kind of deal we recommend that you run. That includes doing the following:

  • Build a higher margin package to bring down your direct costs for each deal.
  • Target a higher sale price to knock out some of the pure bargain shoppers. If your "deal" is a $60 value for $30, and your everyday average service costs $60, you are buying the wrong prospects. Better to offer a $120 value package for $60. 
  • Don't discount a regular offering — create something new for your deal, like a new package of services, a prix fixe dinner service or a new product.
  • Use social media to make the deal go viral. Remember, your existing clients are your best sales channel. Provide a deal that they will want to try and share with their friends. 
  • Limit the number of deals sold to something your business can benefit from without pushing out your regular customers or degrading your service.
  • Measure the results. You want to know the total revenue, profit/loss, new clients, rebooking rate, new email or social media contacts and website traffic resulting from your deal. 

You can apply these principles equally well to a Groupon or any of its clones. Note the flexibility you have when you keep most of the money collected from customers with a BoomTime Deal rather than paying someone else to discount your services.

Use this calculator to see if group deals makes sense for your business. We've seen way too many small businesses jump into group deals without analyzing the true financial impact and crafting a group deal for financial success. 

You know you need to do it. Let us show you how.

We help 4,000 local & independent businesses increase their revenues. Our U.S.-based support and account management teams are just a phone call away — world class marketing consultation and customer support is included in your Boom360 subscription!

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