Re:Chicago Yoga Studio: "Why I won't do a Groupon"
by mturmon on Saturday August 27, 2011 @08:29PM
(#2932936)
The post you refer to was a good example of a business that had intelligently thought through whether Groupon was good for them.
Some other special aspects of that case: Due to the nature of the business, the Groupon'ers had to sign in to a slot in the schedule, eliminating the "rush of customers" problem. And, the business had upsell options like souvenir t-shirts to extract some non-discount money from customers.
Re:Chicago Yoga Studio: "Why I won't do a Groupon"
by mathattack on Sunday August 28, 2011 @08:26PM
(#2935390)
Exactly! Groupon is good for some but not all. Same with Network TV advertising. Same with newspaper coupons.
My impression is that Groupon works better for brining in incremental revenue. A prior HN post on skydiving captured this very well. http://news.ycombinator.com/item?id=2654788 What I mean by incremental is customers who would never use your business to begin with. It also helps if the business is high margin. These businesses tend to have high fixed costs too.
We recently used Groupon for a midweek booking of a fantastic bed and breakfast. Great for them - we'd have never heard of it, and the revenue was largely incremental, while the costs were fixed. Great for us - a B&B when we wanted. Also great for a bespoke suit. ($3000 - a little crazy. But $600 - not so bad)
Yoga seems much more variable cost. A big part of the cost is the teacher. Some back of the napkin (streetfighting?) math suggests a class of 15 people pays $8 per a hour class. Counting prep, set up, and tear down, it takes the teacher an hour and a half. So let's say they make 60. Then it's 60 to pay for the space, AC, etc. Very low margin business. Cutting the revenue by 75% doesn't make sense unless you're selling a lot of add-ons or expecting to convert for long term customers. Both are risky propositions at best.