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Groupon Deal Costs Photographer a Year's Free Work

timothy posted more than 3 years ago | from the just-sign-this-dotted-line dept.

Businesses 209

Andy Smith writes "One professional photographer in Somerset, UK, thought he was drumming up lots of extra business with a special deal on the Groupon group-buying site. Sadly he has ended up committing himself to nearly a year of unpaid work, plus he has to give out over 3,300 free prints." This analysis seems to be based only on the author's observations (rather than the photographer's experience), but the numbers are interesting. It can't work against everyone, though, or I bet there'd be fewer repeat advertisers on the daily-coupon sites.

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209 comments

frist post (-1)

Anonymous Coward | more than 3 years ago | (#36062978)

frist post Eman al-Obeidy, who garnered worldwide attention for her vocal rape allegations against the regime of Moammar Gadhafi, says she has fled Libya, fearing for he

Clueless author (0)

Anonymous Coward | more than 3 years ago | (#36062984)

I don't believe the author of this article knows what he's talking about in regards to the photography business. He's making assumptions, educated ones but they're still assumptions. Does the author know the usual profit margins for photographers especially in the age of digital media? Was he actually contacted by the photographer about being swindled by Groupon or is he simply white knighting because he needs to get pageviews and make a tempest in a teapot?

Nothing to see here.

Re:Clueless author (4, Informative)

hedwards (940851) | more than 3 years ago | (#36063028)

Indeed, this has been a known problem for a while. Groupon typically recommends that businesses set some sort of a limit on the number of coupons available, at least during the first try to see what the response is and to verify that you can handle the extra business. While I do have sympathy for business owners that fail to heed the recommendation, it's hardly Groupon's fault if you don't set any sort of limit on the number of coupons being sold.

Now, had this been a glitch on Groupon's side, that would be completely different.

Re:Clueless author (4, Interesting)

digitig (1056110) | more than 3 years ago | (#36063368)

In fact, if you look at the small print of the offer it does say "subject to availability", so at any point if the photographer felt that take-up was too high he could have called a halt and said "no more available". He doesn't have to set a limit with Groupon; according to a recent consumer affairs program on UK TV it's not unusual for people to buy Groupon vouchers and have them declined by the business because of oversubscription.

Re:Clueless author (3, Insightful)

x*yy*x (2058140) | more than 3 years ago | (#36063518)

Besides, this guy or we know nothing at all about his business idea. Why does everyone just suddenly think he's some kind of a retard? Oh right, this is the internet..

What if he has calculated that he can make a nice profit by selling them additional services? What if he has some students working for free and he is "outsourcing" the job to them, so that the students get experience and pass the class in school? What if..? You get the idea.

Be it any way, if he has a good enterpreunish idea that the day-job-working newspaper-photographer just couldn't think he might be making good money on this. If he really didn't see it thru fully, he can cancel it and everyone just lost a few minutes. But people should stop thinking that everyone else is an idiot.

Re:Clueless author (3, Insightful)

cgenman (325138) | more than 3 years ago | (#36063434)

It could also be that "Captured Light" is a group of contracted photographers... their website doesn't list any photographers by name. 10 of them doing 1 month of work each over the course of a year isn't unheard of for promotion purposes. Also, they're probably sending out their juniors who are going underused. Photographers everywhere have been hurting as of late. They could batch up the retouching and printing (or ship that overseas), and reduce the overall cost of the promotion.

It really depends on how big Captured Light is.

Re:Clueless author (1)

Chaos Incarnate (772793) | more than 3 years ago | (#36063572)

It's possible that it's a group, though with copyright assignment only going to Tim Jones I tend to doubt it.

Re:Clueless author (5, Informative)

chmod a+x mojo (965286) | more than 3 years ago | (#36063694)

"It's possible that it's a group, though with copyright assignment only going to Tim Jones I tend to doubt it."

That is not uncommon. It makes it much easier than assigning copyrights to each photographer@group if you ever have to go to court. Court isn't only for people who try to reprint / copy / claim the work as their own, it is actually more common to have to take someone to court over non-payment for services rendered. I should know, I have a photography business I do as a side job. 9/10 clients are great, they pay on time, don't bitch about every tiny thing and don't try do weasel out of paying for services in any way they can. The last 1/10 is what the courts are for, at least as a last resort.

Re:Clueless author (1)

Anonymous Coward | more than 3 years ago | (#36063984)

9/10 clients are great, they pay on time, don't bitch about every tiny thing and don't try do weasel out of paying for services in any way they can. The last 1/10 is what the courts are for, at least as a last resort.

Yes it amazes me sometimes to see how shitty people can get the moment you ask them to honor what they agreed to, or in a retail environment the moment they think you're a captive audience who has to accept their abuse. It's usually the same small minority of asshats causing the majority of problems.

Maybe local business owners in your area can start maintaining a shared database or exchanged registry of problem customers especially the deadbeats who don't pay their bills. One business puts a customer on that list, you all refuse to do business with that person. What you would find is that the same individuals cause problems wherever they go. I'm tired of the way asshats never have any consequences. Aren't you? The shittier you treat people who are trying to help you, serve you, perform work for you, etc., the more and more you find that no one wants to do business with you. That would be a step towards a better world. It would be just like the way local businesses maintain a list of bad-check writers, just distributed.

I always did feel like corporations make society worse by bending over backwards to get someone's money no matter how rude and unreasonable and irresponsible they are. It sends the message that you can be rude and unreasonable and stupid and still get everything you want. A tiny percentage of a percent on your P&L just isn't worth making it a widespread practice.

Re:Clueless author (1)

mysidia (191772) | more than 3 years ago | (#36063880)

Groupon typically recommends that businesses set some sort of a limit on the number of coupons available

The screenshot in the article says "Sold Out" "301 bought"

Now is 300 1-hour photo shoots really a year's work?

Even if 4 hours of work are required for a 1-hour photo shoot that's 1200 / 8 = 150 8-hour days. Last I checked there were 261 work days in a year.. So I would put this deal at approximately 60% of a year.

Now all this might be free, but the outcome may not be that bad. The question is if the £29 deal will be all that the client buys. If they buy more, then it could be well worth it.

Also, there are bound to be conditions or aspects of the deal, product, or service offered for that price that are not spelled out in the Groupon offer. There's bound to be some place for the photographer to insert additional conditions that would make the deal at least break-even For example, schedule, delivery time frame, additional fees, such as shipping.

Re:Clueless author (2)

larry bagina (561269) | more than 3 years ago | (#36063050)

I don't believe the author of this article knows what he's talking about in regards to the photography business.

According to his byline, Andrews Smith is a newspaper photographer. You somehow forgot to tell us about your experience in the photography business.

Re:Clueless author (5, Funny)

Anonymous Coward | more than 3 years ago | (#36063090)

So is Peter Parker. If Groupon were so evil, why wouldn't Spider-Man be fighting them?

Re:Clueless author (3, Insightful)

brusk (135896) | more than 3 years ago | (#36063426)

He is, but you're probably getting all your news from the Daily Bugle, which never prints anything good about Spider-Man.

Re:Clueless author (0)

Anonymous Coward | more than 3 years ago | (#36063802)

Ah, so he's a member of *two* industries being radically altered in a single decade by the advent of new technology. Now I'm *sure* he doesn't have a bone to pick...

Re:Clueless author (0)

countertrolling (1585477) | more than 3 years ago | (#36063118)

...needs to get pageviews...

Brought to you by Slashdot... The site for free advertisement disguised as 'news'.. pretty thin disguise... and remember, there's no such thing as bad publicity, as long as they spell the name right

Re:Clueless author (5, Insightful)

beelsebob (529313) | more than 3 years ago | (#36063532)

He's making a big assumption that the people buying these will buy nothing else from the photographer. It's highly likely that he will stiff them for extra prints/copies on DVD, and/or get a load of extra contracts out of it. I can see the photographer making good money out of this.

Good chance to up sell (5, Insightful)

Anonymous Coward | more than 3 years ago | (#36063002)

TFA doesn't take into account the chance to up sell his products once in the house. These people could be paying £30 to let a salesman into his house to try and fleece them for all he can. It woulnd't be the first time I've heard of this.

Re:Good chance to up sell (2)

digitig (1056110) | more than 3 years ago | (#36063460)

I wondered about that. The usual technique there is to only offer one modestly-sized print, and to then sell premium prints. In this case the deal includes 11 prints, but there's still a chance to try to sell premium products such as the 30" x 12" framed family montage I have over my mantlepiece, which cost £300 (about $500). That was at the studio, wasn't a hard-sell and eight years down the line we are still glad we made the purchase. Given that this photographer is going into the homes, the chance of a hard sell is greater.

Re:Good chance to up sell (0)

Anonymous Coward | more than 3 years ago | (#36064392)

I work for a company that's done GroupOn a couple times.

It brings lots of people through the door and gets you a big check. The idea with GroupOn is not to make money, it's supposed to be that you'll expose lots of people to your company that may not have otherwise been customers.

The unfortunate part is that many companies are finding that the deal hunters that take advantage of GroupOn (which includes me), are not likely to be repeat customers. They also aren't likely to pay for additional good and services... they're just there to take advantage of a really good deal. Take GroupOn's 50% cut off that deal, and many deals actually cost the businesses money. There are a number of articles on the topic out there about places figuring this out a bit too late. Of course it depends on the type of company, the deal you make, etc.

how is this Groupon's fault? (0)

Anonymous Coward | more than 3 years ago | (#36063018)

Sounds like the photographer didnt do their homework when they setup the add... they could have just as easily setup a billboard ad, or taken out an ad in the local paper (which would have COST THEM MONEY for the ad!) doing something simmilarly dumb. This should be a cuationary tale, yes, but not against Groupon! come on people. This photographer did something dumb, yes. IT IS NOT GROUPON's fault! They didnt set their prices reasonably for the services offered, and offered TOO MANY GROUPONS for the services offered.

Who's fault is it anyway? (1)

funnyguy (28876) | more than 3 years ago | (#36063034)

From my point of view, the photographer knew what he was getting into. It seems the groupon terms are straight forward, they take half, etc. He should have set his maximum coupons to maybe 20 or 30, not 301. He should have been more aware of his costs including time to setup and drive all over. At this point, I'd offer to refund the money to all customer, and cut your losses. Then take an intro to business class at your local community college. Refunding would cost him £4365 if he couldn't get Groupon to chip in any.

Re:Who's fault is it anyway? (1)

Anonymous Coward | more than 3 years ago | (#36063100)

I love the last line of his fine print: "Subject to availability."

He's fine.

Re:Who's fault is it anyway? (1)

raehl (609729) | more than 3 years ago | (#36063520)

Indeed. And Groupon offers a no-questions-asked refund policy (at least in the US), so if the availability sucks, the buyer can get a full refund.

As far as the deal for the photographer, this is just an example of someone who didn't understand the business consequences of what they were doing when they did it. If the photographer had simply done £100 and required the shoot to be at this studio, he'd have done pretty well for himself. Or, he could have gone with the upsell model - offered a very basic package, then sold the customer on a bigger package one they have them at the shoot.

The article also misses another aspect of Groupon - only about half of the coupons get redeemed prior to their expiration date. At that point they just become worth face value in most jurisdictions, so on average, the business gets the full face value of the Groupon for those who redeem them (half the face value for the people who use them, and half for those who don't.)

So while this may not work out great, with half the groupons not being redeemed, and the opportunity to upsell the customers on more services/prints, this isn't going to be as bad as it seems on the surface.

This also works out a lot better for some business models than others. For example restaurants do a lot of $40 of food for $20. But most people who use the groupons can't buy exactly $40 worth of food, so they end up with $20 off of $50 or $60. And since restaurants are generally high fixed cost and lower marginal cost, getting the extra people in the door (and the extra revenue) is worth it to the restaurant.

I wonder, though, how long it will be before people start scamming Groupon for capital. Groupon pays you about half of the coupon sales up front, then the remainder over time as coupons are redeemed. So...

Launch feature Groupon deal
Get check for 25% of total sales (half of your half of the face value)
Move to Tahiti!

Re:Who's fault is it anyway? (1)

MoonBuggy (611105) | more than 3 years ago | (#36063550)

You're absolutely right, and he may just have been an idiot, but that's not necessarily the case. The only real surprise is that they take a full 50% - I would've guessed somewhere between 10% and 30%, and I'd find it hard to justify any reasonable offer when their cut is that high. Either way, though, this guy's story doesn't invalidate Groupon's premise entirely, and it might actually even strengthen the case for using them.

I've always assumed one of the advantages of Groupon (from a seller's perspective) is that the redemption rate is likely to be less than 100%; I'm sure a large amount of the business is based around people buying things they wouldn't have otherwise paid for, on the basis that "it's so cheap we'd be stupid not to buy it..." - it's not likely that all of these people will ever get around to actually using their coupons. Of course, planning for the worst case is a sensible precaution on the part of the business owner, and that's the second place that the article comes in with an unlikely assumption: even if everyone does redeem, why would the guy spend all of his time fulfilling Groupon orders? I imagine he's about to have a lot of conversations along the lines of "Discount portrait photos? Oh, yes, we offer bookings for them every Friday. It's an extremely popular service, so I'm afraid the next available slot is November 18th.". The customers may be somewhat displeased, but you can hardly kick up a fuss about a guy being too popular; it carries the connotation that he must be good, after all (at least for those who haven't read this article) - the only other places with a waiting list like that are world class restaurants. There's the added bonus that a several month wait is likely to further lower the number of people who actually get around to using the service they paid for.

If he plays his cards right, he's now got a few grand up front to pay for nice equipment, a reputation for being so good that there's a six month wait just to see him, and a very reasonable chance that some people have paid him up-front for work he'll never actually have to do. It's risky, but by no means impossible to pull off. Maybe he won't play his cards right, maybe he really is going to spend the next year running himself ragged for no income, but the numbers alone don't necessarily imply that.

Re:Who's fault is it anyway? (0)

Anonymous Coward | more than 3 years ago | (#36063942)

It's 50% because they are bringing the customers. Tons of them. It is meant to be done as a *promotional*, not a sale. With luck you'll make a bit of money after up-sells, cross-sells, no-shows and remaining margin (in photography, there's still margin left after 75% in promotional costs). If you don't like the terms, don't do the deal. But no one else can get you a year's worth of clients in a single weekend. No one else can give you that kind of launch.

Re:Who's fault is it anyway? (1)

iteyoidar (972700) | more than 3 years ago | (#36063862)

I realize slashdot is into the whole libertarian dog eat dog business thing, but it's really in Groupon's best interest to make sure this sort of thing doesn't happen, in particular when they're dealing with so many smaller businesses that might not have all that much expertise and probably aren't totally familiar with the business model. Yeah, the guy shouldn't have done the deal in the first place, but he didn't know what he was getting into and it looks really bad for Groupon to be running their own customers out of business (and it's a pretty terrible long term strategy)

But... (4, Interesting)

raehl (609729) | more than 3 years ago | (#36064042)

Who says he's going to be run out of business?

The guy who wrote the article doesn't know what he's talking about.

I've talked to a good 40 business owners who have used Groupon. Some things that the author of the article totally ignored:

1) Only about half of the Groupons get redeemed
2) If redeemed after the expiration date, they are only good for the face value paid. I.e., if you buy a £200 Groupon for £29, and you don't redeem it before expiration, then you just get £29 off the price of whatever you buy.
3) Upselling is key. For restaurants, when they sell a $40 Groupon for $20, they're betting you're going to come in with some friends and spend $60 to $100 on dinner. I do a lot of work in the recreational activity sector, and there they often do groupons for 50% off a basic package, then once you are there upsell you to a bigger package at full price. In the case of our photographer, if he does it right he'll be getting people to buy £400 or £600 photography packages - "You already are getting all this for £29, look what I can add to it for only £100 more!"

Now, maybe this groupon won't work out great for this one business, but Groupon can work very well if you set it up right and treat it as what it is supposed to be - an advertising/sales lead channel.

A lot of these are gifts (5, Insightful)

Colin Smith (2679) | more than 3 years ago | (#36063036)

We have offered deals through Groupon and generally a lot of them are given as gifts, and promptly forgotten/binned by their recipients.

This is in fact Groupon's business model. You pay for nothing, they keep the money. The business offering the deal only gets paid when they have provided the service.
 

Re:A lot of these are gifts (0)

wilbrod (471600) | more than 3 years ago | (#36063392)

That is wrong. I have used Wagjag, Kijijideals.ca and Teambuy to offer deals for my business and you get paid no matter if the coupons are redeemed or not. Some company pay you a lump sum payment as per the % you agreed to, Others spread it over a few months in order to make sure you keep honoring the coupons I guess.

I agree this business model is doomed and unless they reduce their margin drastically, and even then, we will see the end of this sooner than later. My business is a fast food restaurant and I made sure it would cover my food cost because not everyone buying is a new customer. We sold a lot to regulars who would have come anyways. TeamBuy told me about 10% of the coupons end up not being redeemed after a year.

Re:A lot of these are gifts (0)

Anonymous Coward | more than 3 years ago | (#36063486)

That's interesting. You're the first biz owner that I've heard about that's actually making it work - sort of.

Most businesses that I've read about or talked to, do Groupon once. It reduces their margins too much, they get a bump in sales that actually lose money or it's not really worth it, and they get a bunch of bargain hunters who never come back after using their coupon.

Re:A lot of these are gifts (1)

wilbrod (471600) | more than 3 years ago | (#36063584)

They all want you to do 50/50. Which I did the first time. Sold 100 ish coupons. 5$ gets you 10$ so I got 2.50 per coupon. Next time I only agreed if they were ok with giving me 65% which they did. And I did 60% with the third company. All together we sold about 600 coupons. The redemption rate is really spread out as it has been a few months already and I have not seen 50% redemption rate yet. Not too hard on the business. Some people do buy over their coupon limit too so it helps offsetting any potential losses. Some people on the other hand will make it as close as possible to 10$. I didn't go with groupon because they are too big and I am worried I would sell too many and hinder the efficiency of the business if we saw too many redemption and would have a hard time handling it. You don't want to loose your regulars either.

Re:A lot of these are gifts (1)

Colin Smith (2679) | more than 3 years ago | (#36063814)

That is wrong. I have used Wagjag, Kijijideals.ca and Teambuy

Are not Groupon, you muppet. With Groupon, you do not get paid until the service is rendered. They keep the cash for any coupons not redeemed.
 

WRONG WRONG WRONG (1)

raehl (609729) | more than 3 years ago | (#36064070)

Groupon pays you 50% of all groupons SOLD, whether they are ever redeemed or not. (at least in the US.) And they pay you about half of what you sell the day after they are sold.

Re:A lot of these are gifts (1)

wilbrod (471600) | more than 3 years ago | (#36064268)

I was approached by Groupon as well. They have the same business model and they pay you per coupon sold as well. I should have mentioned it.

Re:A lot of these are gifts (1)

mysidia (191772) | more than 3 years ago | (#36063988)

This is in fact Groupon's business model. You pay for nothing, they keep the money.

Wait... if you never submit the voucher, doesn't that mean it becomes unclaimed property after the consumer has not communicated in writing with Groupon for 2 years, and subject to the buyer's state's escheatment laws, Groupon required by law to return the abandoned property (cash) after the state mandated period?

Basically, the same law that requires retailers to cancel unused gift cards/gift certificates and hand over the money backing them to the state after their dormant period.

Just because it's electronic goods doesn't make it exempt; There was even a thing about a state looking at going after domain name registrars, for not handing over "abandoned" domain names.

Re:A lot of these are gifts (1)

dlgeek (1065796) | more than 3 years ago | (#36064050)

Even if that's the case (and I have no idea if it is, but I'd bet they'd find a way around it), it's basically an interest-free loan to groupon for two years which is still a pretty good deal for them.

Re:A lot of these are gifts (1)

Tacvek (948259) | more than 3 years ago | (#36064336)

Most states do not require gift cards to become unclaimed property. If you don't use them, the merchants will charge service fees to the card until the balance is zero, or until the card expires, at which point they are free to pocket the money. (Only a few states require the business to "escheat" the "abandoned" funds[1], for that to happen, the state must not permit fees, and must either forbid expiration, or specify that the money be processed as unclaimed funds upon expiration.)

So i would not b surprised if Groupon were not required to consider unused coupons as unclaimed funds.

Footnotes:
[1] In that context "escheat" does not actually mean "escheat", since no state actually takes title to unclaimed funds until they have held it for the original owner (or heirs) for a very long time. Further the funds are not actually abandoned, since abandoned property either escheats immediately to the state, or becomes the property of the first person to find, possess, and make a claim to it, which would be the business who issued the gift card.

Making a profit (1)

TheRecklessWanderer (929556) | more than 3 years ago | (#36063042)

Groupon is a good idea, but you have to make a profit for each sale including the coupon. If you don't do that then you shouldn't be doing the promotion. Lost leaders help no one.

Re:Making a profit (2)

Finallyjoined!!! (1158431) | more than 3 years ago | (#36063330)

Was your "Lost leader" a PHB and does he have a particularly bad sense of direction?

Re:Making a profit (1)

pushing-robot (1037830) | more than 3 years ago | (#36063386)

you have to make a profit for each sale including the coupon.

That's rather difficult, considering that Groupon expects you to slash your price by at least 50%, and then they typically take 50% of the remainder as their commission.

So unless you can turn a profit while charging <=25% of your normal rates/prices, it's best to think of Groupon as an advertising expense—not a business method.

Re:Making a profit (3, Informative)

NFN_NLN (633283) | more than 3 years ago | (#36063760)

you have to make a profit for each sale including the coupon.

That's rather difficult, considering that Groupon expects you to slash your price by at least 50%, and then they typically take 50% of the remainder as their commission.

So unless you can turn a profit while charging <=25% of your normal rates/prices, it's best to think of Groupon as an advertising expense—not a business method.

That's why Groupon, at least in my city, has been steadily going down hill. It use to have offers from worthwhile companies. Now it's limited to high margin service sector companies. Groupon is slowly killing itself. I don't even bother checking anymore, and here's why:

- Laser hair removal
- Pet grooming
- Body waxing x3
- Hair electrolysis (hair removal using electricity instead of lasers)
- Sun tanning
- 50% off wine magazines
- Lipolaser fat removal
- Window and Eavestrough cleaning

So Groupon is really targeted at fat, hairy, pasty white people with dirty windows.

It can work very well... (1)

raehl (609729) | more than 3 years ago | (#36064172)

You're missing a lot of factors here.

One, about half of groupons don't get redeemed. So you're really only losing 50%, not 75%.

Two, you're only losing 50% on whatever the coupon gets the customer. The key is, you don't want the customer to only buy what the groupon gets them.

For example, if you are a restaurant and you sell $40 groupons for $20, you want to make sure your customers are spending $60 or more to eat at your restaurant.

If you are, say, an amusement park, selling a $35 admission for $10 is still getting you more money than the admissions you're giving away for free because you really just want people in your place to spend $4 on a soda and $5 on a hot dog.

If you are, say, a ski slope, same theory applies - you're already giving significant cost reductions to season pass holders and other outlets to get people on the hill, so still a good deal.

If you are, say, a paintball field (and paintball field owners LOVE groupon), you might have a $20 admission, $20 rental, and $20 for 500 paintballs. But you probably also have a package price for $35. With Groupon, you offer the package at 50% off the non-package price, so with half the groupons being redeemed, you're still getting $30 instead of your usual $35, and you're probably going to upsell the customer on a better rental or more paintballs or concessions.

Yes, if you have set your business up so that you have no margins on your list/retail prices, groupon isn't going to work for you. But if you have set up your business so that you don't have high margins on your list/retail prices, your real problem is you have not let yourself enough room to promote your business no matter what.

Re:Making a profit (1)

petes_PoV (912422) | more than 3 years ago | (#36063656)

ISTM Groupon are being greedy, taking a 50% skim off the top (i.e. without sharing the credit card commission). So if you were to make a profit on a groupon deal. you'd have to be charging over 100% of your costs to do so. With the recession / crisis (different countries, different words - same squeeze on the wallet), there can't be many businesses that haven't pared their margins and can't therefore afford to take As for follow on business? I doubt many bargain hunters would come back. if they're too tight to pay full price *before* getting the deal, wouldn't they be more likely to just fill their pockets with freebies/cheapbies and then wait for the next offer - or closing down sale? Most of them are more interested in getting a bargain, than in the product they receive (cue Monty Python sketch)

Re:Making a profit (0)

Anonymous Coward | more than 3 years ago | (#36063892)

Groupon is a good idea, but you have to make a profit for each sale including the coupon. If you don't do that then you shouldn't be doing the promotion. Lost leaders help no one.

Sorry, the correct term Is LOSS LEADER

Taking a minimal LOSS on an item to maybe get a LEAD on a larger markup item.
I'll let the next guy make up what a lost lead is???? :-) Customer that gets lost on the way to your shop?
 

Re:Making a profit (1)

GayBliss (544986) | more than 3 years ago | (#36064426)

Groupon is a good idea, but you have to make a profit for each sale including the coupon. If you don't do that then you shouldn't be doing the promotion. Lost leaders help no one.

You apparently don't own a retail business. Advertising is very expensive and sometimes it's necessary to run a business at a loss in order to get people to notice your business and give it a try. It does help, and can lead to a very profitable business in the long run. Loss leaders can pay off big if done right.

basic business sense (4, Insightful)

ffflala (793437) | more than 3 years ago | (#36063044)

This just seems like basic business sense: don't enter into unprofitable agreements. The photographer put a limit on the number of these offers. It seems like a reasonable guess that he was better able to do the arithmetic than the article author, who is purely speculating that this came out to a net loss.

42% would not repeat (5, Interesting)

Hermanas (1665329) | more than 3 years ago | (#36063072)

According to this survey [screenwerk.com] , 42% of Groupon SMBs would not repeat. That's quite a lot, and it's from this and cases like this story that I suspect that the Groupon-like business model will not last too long, once the fad has died.

Re:42% would not repeat (4, Interesting)

smitty777 (1612557) | more than 3 years ago | (#36063218)

According to this survey [screenwerk.com] , 42% of Groupon SMBs would not repeat. That's quite a lot, and it's from this and cases like this story that I suspect that the Groupon-like business model will not last too long, once the fad has died.

I'd give you mod points if I had any. The article mentions one of the benefits is "getting good exposure". But it works both ways. If you have to rush to get all 300 done and do a bad job, you've just delivered a product for a lower profit margin and provided yourself with bad publicity - worst of all worlds.

Re:42% would not repeat (4, Insightful)

RoFLKOPTr (1294290) | more than 3 years ago | (#36063500)

According to this survey [screenwerk.com] , 42% of Groupon SMBs would not repeat. That's quite a lot, and it's from this and cases like this story that I suspect that the Groupon-like business model will not last too long, once the fad has died.

I'd give you mod points if I had any. The article mentions one of the benefits is "getting good exposure". But it works both ways. If you have to rush to get all 300 done and do a bad job, you've just delivered a product for a lower profit margin and provided yourself with bad publicity - worst of all worlds.

I don't understand why anybody would offer such a labor-intensive service via Groupon. Groupon is great for coupons at restaurants and stores and getting exposure for your little hole-in-the-wall store that has cool things but nobody seems to have heard of. It also seems to be great for dentists given the number of ads I get by email every week for dental services. But photography? First of all, that's not really something that's usually based upon a set price. That's something that should be a negotiated price on a per-contract basis. A Groupon would be just fine for, say, $25 for $100 Off Services From Hasselhoff Photography, but $29 for a $200-value remote photoshoot in the location of your choice? That's just ridiculous.

He made a really stupid decision and now he has to eat it. That's all part of running a business. It's not Groupon's fault. But I also don't see anywhere that the photographer himself is complaining... The article doesn't mention any statement by the photographer or have any links to his website. This just seems to be some retarded commentary from the sidelines by somebody who thinks he knows what he's talking about when he says "look what happened to this guy because of Groupon omfg". This whole thing is leaking stupid out of every pore.

Re:42% would not repeat (1)

rolfwind (528248) | more than 3 years ago | (#36063534)

Plus mass, untargeted exposure isn't everything. Marketshare at the cost of margins has been tried and failed in the past often enough. People protest when you raise prices because they are used to the old deal and most services/products are commodities anyway, to be had elsewhere.

misleading article (1)

Anonymous Coward | more than 3 years ago | (#36063472)

While I thank you for the link, it is so full of bad statistics, I don't know where to start.

1. They surveyed 360 businesses but only 150 responded. Obviously the unsatisfied ones would be biased towards responding. This could cut the "real" would -not-repeat-rate by as much as half.
2. The article rips Groupon for the fact that only 15% of customers came back for repeat purchases. Again the bias above applies, and secondly, if those 15% come back and pay a lot of margin, this is still a good deal for merchants. In other words, who cares about the figure 15%; I care about lifetime dollars spent by those 15% who wouldn't have come to me otherwise.
3. Finally, who cares about "would you run another Groupon"? The right question is "If you had it to do over again, would you run your first Groupon?". Since the objective is advertising to the Groupon base, once is enough. Even a merchant who profited on a first Groupon might not want to run another.

Re:misleading article (1)

brit74 (831798) | more than 3 years ago | (#36064388)

To be fair, you could also go the other direction. For example, you say, "1. They surveyed 360 businesses but only 150 responded. Obviously the unsatisfied ones would be biased towards responding. This could cut the "real" would -not-repeat-rate by as much as half." Who says the unsatisfied ones would be biased towards reporting? Maybe the unsatisfied ones are apathetic towards responding, and the satisfied ones are energized to respond. You say that the "This could cut the "real" would -not-repeat-rate by as much as half", but maybe the real would-not-repeat rate is much higher than that.

3. Finally, who cares about "would you run another Groupon"? The right question is "If you had it to do over again, would you run your first Groupon?". Since the objective is advertising to the Groupon base, once is enough. Even a merchant who profited on a first Groupon might not want to run another.
Actually, it matters a lot because it means you aren't getting repeat business. Sure, there are new businesses opening every month, and those businesses might want to take advantage of groupon, but, right now, groupon might be getting all the new businesses who started within the last year. In another year from now, they might only get all the businesses that opened within that month. That's a steep decline in the number of businesses wanting to do groupon. Also, with fewer businesses using groupon a year from now, there's less talk about groupon, which means businesses might miss-out on using them. And, if businesses are unhappy with using groupon the first time, there might be negative talk about groupon, causing businesses to pass-up the deal because there's a decent chance for having a bad experience.

By the way, do you work for groupon or one of the other online-coupon services? I hear that there's already big conventions for these internet-coupon marketers. It all suggests to me that were nearing the top of the bubble for online-coupon companies.

I don't think the business model will disappear (1)

YesIAmAScript (886271) | more than 3 years ago | (#36063782)

I just don't think it'll get very large.

This kind of business model has existed in only slightly different forms for quite a while. In the 70s, there were large coupon books that were heavily advertised and contained one coupon from each of many businesses.

They gave huge discounts, but you only got one coupon for the company per book. The book was sold for a fee that wasn't so small that you could afford to buy the book and throw away all the coupons but the one you wanted. But if you used many of the coupons you would come out ahead.

Anyway, this was the same thing. It brought profits for the coupon sellers and mostly introduced customers for the businesses who had coupons in there.

These stuck around for a long time, and Groupon is just a newer version. So I don't think this will go away, but I don't see why companies are falling over each other to get into this business space.

Re:42% would not repeat (1)

MoonBuggy (611105) | more than 3 years ago | (#36063788)

If the Groupon model fails, I wouldn't be surprised if it's down to their own greed. Their running costs are basically a few servers and little else, yet they're taking a full 50% of every sale - combine that with a 50%+ discount on the sticker price, and the seller is only taking home a quarter of their normal sale price. Even with relatively low redemption rates it's hard to turn a profit on that, so a listing on Groupon becomes a one-off advertising expense.

If Groupon took 15%, on the other hand, there would be far more chance that the seller could offer a 50% discount and still make a small profit, maybe even before non-redeemed coupons were taken into account. As soon as you're above break-even, the extra volume brought in has real value of its own, beyond just good marketing - it becomes a (admittedly probably small) source of income as well as a marketing tool. And that allows more companies to use Groupon, making everyone more money in the long run.

Essentially, they need to take their own advice: knock down the costs and make it up in volume.

Re:42% would not repeat (0)

Anonymous Coward | more than 3 years ago | (#36064272)

Where is the value for a business is attracting customers who know exactly where to find a new cheap deal every day.

The exposed customer base for groupon advertisers is just not valuable.

No one is forcing you to use Groupon (1)

Yeknomaguh (1681980) | more than 3 years ago | (#36063074)

Ok, if you think using Groupon is unprofitable, don't use it! Also, I'd like to point out that the author of the blog is in the same industry in the same area, so to me this seems like someone seeing the success of one of his competitors and trying to dissuade other competitors from achieving success in the same way by offering "friendly advice."

Re:No one is forcing you to use Groupon (0)

Anonymous Coward | more than 3 years ago | (#36063192)

That's not the problem. Until this article all I heard were good things about Groupon, and that was on the customer end. Groupon doesn't exist in my area so I never tried it on a customer end nor do I have anyone to talk to on the business end. Some are going to get burned badly by Groupon until they learn what to watch for.

But I am leaning to your view here. We can't go by the original article here. The photographer he is complaining about could be an idiot. The photographer he is using as an example could have a completely different business model. All this "free year" could be hoisted off on some assistants as a way to help them improve their skills on clients that likely weren't important customers anyways.

Re:No one is forcing you to use Groupon (1)

larry bagina (561269) | more than 3 years ago | (#36064036)

I've never used groupon myself, although I have friends that use it. For restaurants, particularly, it can fuck you over. With the discount and groupon's 50% cut, you're losing money and hoping to make it up with exposure and return customers. But if a sizable chunk of people show up at once, you might not be able to manage them all. Hello bad reviews, goodbye repeat customers. The other problem is, groupon people aren't loyal to you so much as they're loyal to groupon and the next big deal.

Groupon is The Big Thing with a huge IPO in the future, facebook and google trying to compete (after trying to buy them), but it smells like a bubble to me.

Re:No one is forcing you to use Groupon (1)

MoonBuggy (611105) | more than 3 years ago | (#36063936)

They are in the same industry, but certainly not in the same area [google.com] .

Re:No one is forcing you to use Groupon (1)

brit74 (831798) | more than 3 years ago | (#36064436)

> Ok, if you think using Groupon is unprofitable, don't use it!

That's kind of the point. Companies are still figuring out if it's worth it or not. That's what the post is about. I've also heard that a lot of restaurants hope to make money because groupon customers will bring a friend or buy more than the coupon is worth. I've heard (through the planet money podcast) that customers just haven't been buying much over the coupon value, which makes it harder for restaurants. Again, it's an exploratory thing - businesses don't know how profitable the groupon will be in terms of people buying things above the cost of the coupon or whether they'll be repeat customers.

Who's Fail? (2)

xMrFishx (1956084) | more than 3 years ago | (#36063078)

I can't tell who's fail it is. Was it Groupon for not allowing a finite amount of offers to be sold (or notifying the photographer to set a finite amount), or was it the photographer for not gauging his limits as to how many at-cost shoots he can feasibly, and thus setting his "sales limit" too high. TFA shows he sold 301, but was that His limit, or Theirs? I figure it was set by the photographer, and therefore he screwed up by pre-agreeing to do more than he was able.

What Fail? (1)

itsdapead (734413) | more than 3 years ago | (#36063816)

I can't tell who's fail it is.

TFA doesn't provide any evidence of a failure - read TFA carefully - its someone who has seen the ad on Groupon presenting their own calculations as to its viability (which may be exaggerated e.g. - £5 each for photo frames in quantities of 300+? Has the guy never heard of China? Even retail, one-off at IKEA [ikea.com] you can get them for under £3.)

As several other posters point out, he doesn't include the value of unredeemed coupons.

Nor does he take into account how much extra money the photographer could make by doing a hard sell on extra prints, nicer frames, albums, posters, coffee mugs, mouse mats, or by selling makeover and costume hire services.

Plenty of photo studios offer free or very cheap "glamour photography" sessions where they make their money selling prints and extras (there have been a few whinges on consumer shows from punters who "win" sessions and then discover that they have to pay for prints and that the "makeover" is theatrical slap that has to be washed off before they go out in daylight least they frighten small children).

Re:What Fail? (1)

xMrFishx (1956084) | more than 3 years ago | (#36063978)

My OH uses Groupon for bagging offers, but I'm more the sceptic who looks at these and says "too good to be true". Much like you say, sold extras.

I see what you mean now about the article being a poor estimate at best. When I wrote that I misinterpreted it as a report via the photographer who was claiming he was at a loss and thus someone else drummed up an article around it. I now see what the article is, thanks.

Re:Who's Fail? (1)

Relayman (1068986) | more than 3 years ago | (#36063934)

One fail: I think the original price of £200 is too low. Based on three hours of work and expenses, it should be at least £300. The offer should at least cover the cost of materials; this is the photographers fault.

Re:Who's Fail? (1)

itsdapead (734413) | more than 3 years ago | (#36064438)

One fail: I think the original price of £200 is too low. Based on three hours of work and expenses, it should be at least £300.

Which would suggest that each punter can be persuaded to buy, on average, enough extras (prints, frames, albums, makeovers) to make up that £100... and the Groupon customers already think they've saved £170, so why not blow it on a big print, normal price £300, at a special one time only, gone as soon as I walk out the door price of £249.95...

No Empathy nor Sympathy (1)

yeshuawatso (1774190) | more than 3 years ago | (#36063114)

Am I supposed to feel sorry for, or even relate to, the guy who didn't sit down for 30 minutes at the most, assuming he's not a business person, and do a break even analysis?

Here, this is a layman's break even in this case: minimum # sales = (desired total revenue)/(groupon take home amount) -(total cost of a package)

Simplistic. You need not know fixed cost or contribution margin definitions, just how much the typical shoot costs you and how much Groupon is going to fork over to you. While this isn't technically breaking even (target income, actually), it's a great way to come up with ways to play with your numbers BEFORE committing to ANYTHING. Last time I checked, Groupon had an all or nothing deal where if one didn't attain X number of sales, then the discount didn't happen.

Lastly, Groupon's sales staff should have made this man aware of the dangers if not performing a break even analysis. If they're hiring competent people then it would have taken them 10 minutes to help the client out in this way.

Re:No Empathy nor Sympathy (0)

Anonymous Coward | more than 3 years ago | (#36063284)

Pillock. You think he's going to sit their doing one after the other? Give the guy some credit. He'll do one a week and try to up-sell additional services to the groupon muppets.

Re:No Empathy nor Sympathy (0)

Anonymous Coward | more than 3 years ago | (#36064390)

No need for abreak even study. If this guy has any clue he will upsell the shit out of these people and make a huge profit. The article is an epic fail in its sheer cluelessness as to how this works and was a complete waste of time.

Have to think it through before you get on board. (0)

Anonymous Coward | more than 3 years ago | (#36063148)

Different scale but even Navy Pier in Chicago had to explain why some revenues for an event were down (in spite of attendance being up) because of Groupon use.

http://www.chicagobusiness.com/article/20101215/NEWS07/101219928/navy-pier-blames-groupon-for-cutting-into-winter-wonderfest-revenue

Re:Have to think it through before you get on boar (2)

UnknowingFool (672806) | more than 3 years ago | (#36064228)

Yes it may be true however businesses don't understand how to use Groupon. It is supposed to be used for marketing/lead generation. In the past, businesses might have had to use newspaper, flyers, to distribute coupons to generate interest. Most of the time these coupons will lead to lower revenue but higher traffic. Groupon takes this a step further by generating revenue upfront. If the coupon is used, then this is no different than the previous method just more high tech. The main difference is that if the coupon is never used (which is expected), both Groupon and the business pocket revenue for very little cost. Even if the coupon is never used, the primary goal of generating interest might succeed as some customers may still patronize the business out of curiosity.

Upsells (0)

Anonymous Coward | more than 3 years ago | (#36063152)

If all of this math is even correct, and if every single coupon recipient exercises their coupon (I bet it is less than 50%), he still has substantial opportunity to up sell each client into a very profitable package (photographers have markup in excess of 200% on many items). Also, it is possible that this guy is just starting out on his own. If he wasn't going to make any money anyways, this isn't a bad way to advertise and get some customers to jumpstart his business... There are lots of variables that might not click for some, but be a god send for another.

Funny (4, Insightful)

madcat2c (1292296) | more than 3 years ago | (#36063154)

It does't say a professional photographer does it? It just says photoshoot. They could be keeping the interns busy. But a decent chunk of these things never go claimed, and I am sure there are things that they can upsell the groupon buyers on.

Re:Funny (0)

Anonymous Coward | more than 3 years ago | (#36063484)

Precisely, everyone assumes the photographer is filling these orders with only the best intentIons. Just like yearbook photos the first one is always the cheapest, but the ordeal quickly turns very expensive. nevermind the possibilities this could be spun several different ways to ensure a minimum turnout over time wit a bare minimum cost.

Really what they have done is managed to advertise an expensive package for cheap.

he should file for bankruptcy n/t (0)

Anonymous Coward | more than 3 years ago | (#36063162)

he should file for bankruptcy

Not quite right (1)

sgnn7 (2127164) | more than 3 years ago | (#36063226)

While it may seem that he will run on red for a year, you have to realize that:
  • Large number of people will not redeem the coupon (forgetting, unavailability, etc)
  • Repeat business will increase
  • Influx of money now is better than later for a business (to buy better mass-production equipement, etc)

I would venture to guess that he will do fine

Isn't this that called a "cabal contract'? (0)

Anonymous Coward | more than 3 years ago | (#36063268)

It can be a cabal contract, which, in some jurisdictions, may be shown by court null and void.
Better talk with your lawyer.

So? (1)

Adam Appel (1991764) | more than 3 years ago | (#36063294)

I have a service based business, every time I consider a promotion or sale i take the minimum amount of money I want then ADD my over head to that including promotion cost. So what, another person that wants to own their own business can't do math? What a shocking story.

How is this Groupon's problem? (1, Insightful)

Posting=!Working (197779) | more than 3 years ago | (#36063296)

So an idiot offered a deal where he lost money. It's not like Groupon set up the deal, decided on the services offered or set the price and number of packages. That was all the photographer's choice, it's not Groupon's job to decide any of that or do an analysis of the deal. Their job is to sell the coupons.

Stores didn't tell Gillette to charge for the razor, they just sold the blades. It's not the store's job to determine if the manufacturer makes money. Groupon is no different.

Re:How is this Groupon's problem? (1)

lenart (582259) | more than 3 years ago | (#36064366)

So an idiot offered a deal where he lost money. It's not like Groupon set up the deal, decided on the services offered or set the price and number of packages. That was all the photographer's choice, it's not Groupon's job to decide any of that or do an analysis of the deal. Their job is to sell the coupons.

Stores didn't tell Gillette to charge for the razor, they just sold the blades. It's not the store's job to determine if the manufacturer makes money. Groupon is no different.

It kinda is. Well, that is if Groupon wants to stay in business. Imagine you are a business owner and you read that Groupon is selling deals that puts other businesses out of business. That would be bad press for Groupon's target market no? Also, imagine you are one of the buyers of a coupon and you find out that the photographer that is supposed to do your photo-shoot went bankrupt. As a customer you will feel cheated. You might not want to buy another coupon from Groupon. So it's Groupon's problem because, like any business, they most probably strive to provide their customers with good service. With regards to your Gillette comparison, it does not work. Gillette uses a store to sell their product. The store has every right to provide their customers with coupons for both handles and blades. It does not change the price Gillette charges the store for their product.

Seen it before. Here's what's going to happen. (2, Interesting)

Anonymous Coward | more than 3 years ago | (#36063312)

I've seen nearly-identical "deals" for photography packages on Groupon before. To be a successful commercial photographer, you need 1) equipment 2) a measure of skill and talent and 3) enough business smarts to make enough money for your time.

The move to digital has significantly lowered requirement #1, equipment. Until an photographer starts building a portfolio and eliciting feedback from others (preferably experienced photographers), they won't have a clue as to requirement #2, their skill level. That lack of understanding hurts requirement #3, knowing what to charge.

So here's how the scenario above will play out. 300 Groupon users will call and make bookings in the near future. The photographer will accept a handful of them at first, and quickly realize what he/she's gotten him/herself into. The photographer will then try to weasel out of the rest of the coupons; pushing available dates into the distant future, cancellations, attempting to disqualify the coupon, attempting to change the terms, stalling, and finally flat our ignoring them. Groupon users will then complain the Groupon, who will eventually get the money back, and everyone will walk away unhappy.

People will be quick to blame Groupon in this case. But its wholly the photographers fault. If you, as a business owner, overcommit your product, your resources, your services, or yourself, you only have yourself to blame.

Disclosure: I've done some work as a commercial photographer, mostly because I enjoy the occasional change from the usual 9-5 IT work. Feel free to hit up the link in my sig.

Re:Seen it before. Here's what's going to happen. (0)

vmxeo (173325) | more than 3 years ago | (#36063362)

I've seen nearly-identical "deals" for photography packages on Groupon before. To be a successful commercial photographer, you need 1) equipment 2) a measure of skill and talent and 3) enough business smarts to make enough money for your time.

The move to digital has significantly lowered requirement #1, equipment. Until an photographer starts building a portfolio and eliciting feedback from others (preferably experienced photographers), they won't have a clue as to requirement #2, their skill level. That lack of understanding hurts requirement #3, knowing what to charge.

So here's how the scenario above will play out. 300 Groupon users will call and make bookings in the near future. The photographer will accept a handful of them at first, and quickly realize what he/she's gotten him/herself into. The photographer will then try to weasel out of the rest of the coupons; pushing available dates into the distant future, cancellations, attempting to disqualify the coupon, attempting to change the terms, stalling, and finally flat our ignoring them. Groupon users will then complain the Groupon, who will eventually get the money back, and everyone will walk away unhappy.

People will be quick to blame Groupon in this case. But its wholly the photographers fault. If you, as a business owner, overcommit your product, your resources, your services, or yourself, you only have yourself to blame.

Disclosure: I've done some work as a commercial photographer, mostly because I enjoy the occasional change from the usual 9-5 IT work. Feel free to hit up the link in my sig.

Doh. Just realized I wasn't logged in and posted that as Anon. Link in sig is below:

Promotion isn't always "free" (1)

billcopc (196330) | more than 3 years ago | (#36063322)

The way to look at Groupon, or any other kind of coupon/discount deal, is as a form of promotion/advertising.

If you take out a magazine or billboard ad, you're paying up-front for something that may or may not generate new business.

If you set up a Groupon promo, the only cost is to provide your service or product at next-to-no-profit. This is a very small price to pay and you're only paying it for actual clients. If a client winds up not using it within the allowed time frame, you end up pocketing your half of the Groupon sale price.

For many small businesses this winds up being a better deal than traditional advertising.

Those who didnt use the coupon (1)

mehrotra.akash (1539473) | more than 3 years ago | (#36063334)

Did he consider that many people may never actually use the coupon?
(just like people impulse buy games on Steam @ 90%off, but never play them)

He can just go out of business (1)

Woogiemonger (628172) | more than 3 years ago | (#36063360)

It happens often enough.. A company offers groupons then goes out of business. Customers complain to groupon and get refunds, no questions asked. I think everyone, including Groupon, is really fine with it and no one ends up going to court or doing slave labor.

Re:He can just go out of business (1)

makomk (752139) | more than 3 years ago | (#36063874)

It happens often enough.. A company offers groupons then goes out of business. Customers complain to groupon and get refunds, no questions asked.

Except the person who quite likely put a lot of money into going into business, and possibly even went into personal debt, only to be driven out of business at a huge personal financial loss by unwise use of Groupon.

Re:He can just go out of business (1)

SquirrelDeth (1972694) | more than 3 years ago | (#36063922)

Strike the company register a new one sell your stuff to new company only a few hundred dollars lost. Unless his company name is that important to him.

Article (2)

Andy Smith (55346) | more than 3 years ago | (#36063466)

I'm afraid my humble blog has again yielded to the footfall of a thousand stampeding slashdotters. One of these days I really should move to a dedicated server, but for now here is the text of the article...

Beware of the Groupon piranhas eating you alive!

This is a cautionary tale for anyone who may think of offering a deal through Groupon, the group-buying site that promises great deals for customers and great exposure for businesses.

The idea is that, as a business, you offer a special deal on the Groupon web site. For example a restaurant may offer a meal-for-two worth £200 for the bargain price of £80. Groupon takes a 50% cut so the restaurant gets £40 which should be enough to cover the actual cost of the food, plus they've had some good exposure and, hopefully, the few hundred people who bought the deal will go back another day and pay full price. Maybe they'll even become regular customers.

But look at what happened to one independent photographer in Somerset:

He offered a £200 portrait package for £29, which was bought by 301 people.

Let's break that down...

Firstly the photographer will only get £14.50 because Groupon takes half. And if the client pays by credit card, which they probably will, then the photographer has to pay the credit card fee, so he's only getting around £12.

Each shoot lasts one hour, but it can be anywhere the client chooses within 15 miles of Bristol city centre. So let's suppose the total time for travel is half an hour each way, plus 20 minutes to set-up lighting and background and 10 minutes to tear it all down at the end. Already he's up to 2.5 hours so he's charging £4.80 per hour, not taking fuel costs in to account.

"Every photo taken will be put on CD or DVD in high resolution" -- this is fairly trivial, let's say 15 minutes work and £1 for the disc and case. He's now getting the equivalent of £4 per hour.

But the deal gets better! "20 of the images will be professionally edited and air brushed" -- now I assume this is nothing more than a bit of spot removal and some minor tweaks, because there's no way you can do a full retouching job as part of a £29 package, and there's certainly no way you can do 20 of them. So we'll estimate a super-speedy 5 minutes per picture and imagine that he somehow gets the whole lot done in 2 hours. He's now on £2.32 per hour.

Anything else included? Yes! You get "one 12x10 framed print, two 10x8 prints, two 8x6 prints, two 5x4 prints, two 4x3 prints, and two 3x2 prints" -- a total of 11 prints, with the largest one framed. I'd estimate the absolute rock-bottom price for producing those prints will be £8 plus another £5 for the frame if he's buying in bulk. That's £13. That's more than he's getting from each client, and he's got 301 clients to make his way through.

Even if this photographer is doing each job to a bare minimum standard, he has committed himself to nearly a year's work for no money. If that doesn't sound like good business sense to you then be very careful if you decide to offer a deal through Groupon or any similar site. What may at first seem like success could very easily put you out of business.

Re:Article (0)

Anonymous Coward | more than 3 years ago | (#36063538)

Hey, I'm not sure I agree 100% with all your points, although I'm deeply skeptical of Groupon. However, kudos for you for reposting your essay here. Some people don't realize the value of writing can be increased when shared and copied

Re:Article (0)

Anonymous Coward | more than 3 years ago | (#36063682)

The photographer was an idiot to offer that sort of deal to begin with. This photographer has no business running a business. That's a sort of deal you offer up to some charity for an auction or gift basket and give out one of them. Not something you offer up to the masses of un-loyal Walmart type shoppers who are Groupon customers.

That being said, the photographer needs to "be booked" most of the time when these Groupon "customers" actually come calling and decide on which ratio of calls they want to take on. 1 out of 10 maybe? Spread the 301 Groupon "customers" across the next 5 or 10 years with your regular, paying, business. Oh and up-sell the hell out of those Groupon cheapskates, you probably won't get a dime out of them since they shop purely based on price. Oh and if you screw one of their prints up expect to have to deal with an irate a-hole who's still expecting quality, professional service for nothing.

I feel sorry for the poor guy (1)

Kupfernigk (1190345) | more than 3 years ago | (#36063940)

I think his website is pretty hopeless, he has adopted a name which is already well used and he has an email link rather than a proper form submission linked to a database. Also, what's with the "Somerset"? There's no address on the website, but he quotes a 15 mile radius of Bristol - which is in Bristol, thank you very much. (I live on the Somerset/Wilts border.)

I can't help but think that what he really needs is some good business advice, though as he may possibly now end up having to go into hiding from creditors, it could be a bit late.

What is the news, the stuff that matters, exactly? (1)

beckett (27524) | more than 3 years ago | (#36063552)

This looks like a loss-leader, and death-by-coupon isn't anything new. In a big city it's pretty easy to spot the restaurants in deep trouble; they start with coupon specials, which turn into permanent coupons. Then they start closing on Mondays and Tuesdays. Similarly, it's easy to spot a professional photographer that can't get steady work. Groupon isn't doing anything that hasn't been done a thousand times before, and there will be no shortage of photographers and restauranteurs with extremely poor business acumen. The summary and article portray (lol) the photographer as a victim in the inhuman Groupon grinder, and it's interesting how a poor business decision becomes a front page, slashdot sob story. photographers looking for work is nothing new; we just gave a lot of free advertising away, and that alone makes the Groupon deal the bargain of the week.

This could work out OK. (4, Insightful)

Animats (122034) | more than 3 years ago | (#36063932)

He underpriced his offer, but it doesn't have to be a disaster. It's a workflow problem. The photographer gets to schedule the shoots, so he has to get them organized into blocks in the same area. Many people won't have a location in mind, and he can get them to go either to his studio or to one of several pre-selected scenic locations. Once set up in a location, customers can be run through in an hour each. Customers who insist on a specific location have to wait longer for a time slot to open up.

The post-processing work is also a workflow problem. For most shots, a minute or two in Photoshop is enough. Those can be farmed out to an intern, or even some site like GetAFreelancer. The paper printing, DVD making, and framing gets done in bulk, with bids from various companies.

If half the people who bought the coupon actually use the service, and the photographer is organized about it, it's probably about six weeks of work.

The photographer can up-sell. Want hair, makeup,or costuming? Available for an extra charge. Some of the business will be wedding-related, and that's an opportunity to sell a whole wedding package.

This is all speculation (1)

AnonymmousCoward (2026904) | more than 3 years ago | (#36063956)

by the author of the article. Who knows what the business model of the photographer is or what they actually had to do/pay for these photo shoots? For all we know, all the speculation in this article is completely inaccurate. Why is this story even on /. ...

You don't want these clients (1)

HeavyDevelopment (1117531) | more than 3 years ago | (#36063968)

Here's the problem with Groupon and coupon people in general, you don't want them as clients. One generally they are a pain in the ass to deal with. These are the type of people that want something for nothing and push the bounds of the offer. They also tend to be very nit-picky. The best clients I've ever had paid top dollar, and let me do their job. In return I have often gone above and beyond and offer them services or products for no charge because you want to keep these people as clients. Consequently I generally keep clients for a long time and get great referrals. There is no loyalty among coupon people. As soon as you have fulfilled your end of the deal they are off to the next deal. Many coupon people are obsessively looking for the best deal, and will never use your products or services again. Here is another problem with coupons, since you are operating at a loss it's very difficult to give someone the type of customer service they need to become a long term client. Coupons also work better for commodity items. It's a lot easier to sell a $10 sandwich and receive $2.50 for it when the overhead of the business and employees are already accounted for. The only thing you have to pay for additionally is the extra inputs of bread, meat, cheese and lettuce. Something that is more labor intensive (particularly if it's your own labor) is going to cost you a lot more in comparison.

It isn't really a coupon, it's a gift certificate. (0)

Anonymous Coward | more than 3 years ago | (#36063986)

In the USA, the company selling the gift certificate is legally obligated to give a *full refund* anytime in the next 5 years.

So every day, the value of those "forgotten coupons" adds up.

And the government (consumer protection division) could step in at any time and order a *full payout* to everyone. Not just to the people who complain. To *everyone*.

So what is my point? The "coupon" company could be forced into bankruptcy overnight, that's what.

Re:It isn't really a coupon, it's a gift certifica (1)

LordEd (840443) | more than 3 years ago | (#36064160)

Its not really a gift certificate. You aren't buying something at $1 in == $1 out. You're pre-buying a meal, product or package at x% less than the marked price, pre-paying for it, and getting the discounted rate according to a set of listed terms.

If you get a hotel room at the internet pre-pay non-refundable rate and decide not to stay there, you don't get a refund either.

TFA doesn't mention is the gift card effect (1)

HeavyDevelopment (1117531) | more than 3 years ago | (#36064044)

This guy isn't entirely out of luck there are surely 20-30% of people that won't use the offer. So he will get basically free money which will help cover the costs.

"Consumer Reports is also releasing its latest survey, which finds that 27 percent of gift card recipients have not used one or more of these cards, up from 19 percent at the same time last year. And among consumers with unredeemed cards from last season, 51 percent have 2 or more."

And opposed to a gift cards (well at least in California), coupons expire. Depending on the expiration date of the offer, it might not be that bad for him. I'm sure that a lot of people have the intention of using this coupon but because of scheduling they can't do it and the further it gets away from the date the less they will remember.

Groupon is bullshit (0)

Anonymous Coward | more than 3 years ago | (#36064170)

Facebook is bullshit. Myspace is bullshit.

While countries other than the US are actually producing things of tangible value, and the US debt to other countries increases correspondingly, idiots in
Silicon Valley are engaged in a mass circle-jerk, selling stuff which has no value.

The emperor has no clothes. The sooner you venture-capitalist twits wake up and realize this is true, the sooner the US economy will have a chance of avoiding utter destruction.

A Similar Story (3, Informative)

Big Sean O (317186) | more than 3 years ago | (#36064264)

"Cupcake Gallary" (a small Chicago bakery) got stung because Groupon essentially gave them an ultimatum. They declined and Groupon cancelled all the previous Groupons.

http://www.uptownupdate.com/2011/05/groupon-cancellation-cupcake-gallery.html [uptownupdate.com]

I think Groupon is a great idea, but this type of bullying douchbaggery to their "partners" is making me rethink ever using them.

Has anyone actually read the fine print??? (0)

Anonymous Coward | more than 3 years ago | (#36064298)

Notice that the photographer retains the copyright for all commercial uses of the photos. He is going to have about 45k photos that he can sell as stock photos. I would also agree that they are probably farming this work out to interns and to keep them busy, but they will have plenty of opportunity to make a back-door profit on this.

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