Living Social = Living Nightmare

[Flannigan]

I have never been a fan of these sites (Living Social, Groupon etc). First of all you have to discount your service, usually by at least 40-50%, so right off the bat your $100 service is only selling for $50. then on top of that the site takes a percentage (40-50%) so in reality you are doing the job for 1/4 of the price. I'm sorry, but for a service job that doesn't make much sense to me at all. People will talk about upsells and so on, but you can't count on them, and thinking you MIGHT get upsells doesn't pay the bills last time I checked. Here is some quick math:

Let’s say you are selling a $100 wash and wax for $50, so you are actually getting $25 after all the fees. You are going to make a total of $15000.00. That sounds awesome at first, however.... If you work 6 days a week you can knock out 2-3 a day (you're not doing more and doing them right) you are talking about taking 200-300 days to finish, that’s almost a year, and doesn't even take into account paying for supplies, electricity, water, rent, or helpers if you have any. So in essence you are taking a year of work and only making $15000 minus expenses, which comes out to about $7.5 an hour on the high side. Doesn't make much sense to me.

On the other hand if you are a high volume shop you would make the same amount of money, but you would have to pay helpers to get them all done. It would take far less time, but you would be left with far less profit after it’s all said and done. All in all I think that those sites are great for the customer, and great for a company that sells a product, but for a service like detailing, I just don’t think it makes sense.

Now, if you scale it back a bunch to say 25-50 units, it can be a good way to get customers in the door. However, I have looked into both of the most popular sites, and in my area they would not allow me to set a deal for less than 500 units. It just isn’t worth it.

[NoleFan]

Wow, that would be taking a big hit. It would be better just for the customer and detailer to run an ad in the local paper with some sort of discount taking out the middle man. Living Social has to be making a fortune!

[C. Charles Hahn]

Welcome to "Why most small businesses fail within a year" 101.

[Flash Gordon]

Those kinds of things have one goal... To make money off other people's hard work. I don't want even one person dissatisfied. Once that happens .. You're done. Hope that guy didnt have a lot of money invested. There is one cruel reality with a business that gets you customers...you better be able to BOTH deliver the goods and make a profit ...or your name and wallet will be next to worthless.

John

I have never been a fan of these sites (Living Social, Groupon etc). First of all you have to discount your service, usually by at least 40-50%, so right off the bat your $100 service is only selling for $50. then on top of that the site takes a percentage (40-50%) so in reality you are doing the job for 1/4 of the price. I'm sorry, but for a service job that doesn't make much sense to me at all. People will talk about upsells and so on, but you can't count on them, and thinking you MIGHT get upsells doesn't pay the bills last time I checked. Here is some quick math:

Let’s say you are selling a $100 wash and wax for $50, so you are actually getting $25 after all the fees. You are going to make a total of $15000.00. That sounds awesome at first, however.... If you work 6 days a week you can knock out 2-3 a day (you're not doing more and doing them right) you are talking about taking 200-300 days to finish, that’s almost a year, and doesn't even take into account paying for supplies, electricity, water, rent, or helpers if you have any. So in essence you are taking a year of work and only making $15000 minus expenses, which comes out to about $7.5 an hour on the high side. Doesn't make much sense to me.

On the other hand if you are a high volume shop you would make the same amount of money, but you would have to pay helpers to get them all done. It would take far less time, but you would be left with far less profit after it’s all said and done. All in all I think that those sites are great for the customer, and great for a company that sells a product, but for a service like detailing, I just don’t think it makes sense.

Now, if you scale it back a bunch to say $25-50, it can be a good way to get customers in the door. However, I have looked into both of the most popular sites, and in my area they would not allow me to set a deal for less than 500 units. It just isn’t worth it.

Alot of good points were made here Flannigan ^

If I were to delve into a venture like this Social Madness, I would do a couple things to test the waters

1) If I were normally charging $100 for a service, to them that services "retail" value would be between $185-$210. At that point you could take a 50% hit and it would have no effect

2) I would limit the amount of deals to 50-100

3) I would start the deal with something like a headlight restoration. $150 retail could bring you $75 quick dollars. At that point you upsell



If you have a website, I think the additional traffic would be beneficial as well

[Flannigan]

John



Alot of good points were made here Flannigan ^

If I were to delve into a venture like this Social Madness, I would do a couple things to test the waters

1) If I were normally charging $100 for a service, to them that services "retail" value would be between $185-$210. At that point you could take a 50% hit and it would have no effect

2) I would limit the amount of deals to 50-100

3) I would start the deal with something like a headlight restoration. $150 retail could bring you $75 quick dollars. At that point you upsell



If you have a website, I think the additional traffic would be beneficial as well

Thanks Flash. I agree the website traffic would be good.

On the "deal" though, it's not just the initial 50% you lose on the deal. You also lose another percentage for the sites fee. so your $75 profit for the headlight resto quickly drops to about $40-50. Thats not bad money for a headlight resto if you get 100 of them, as long as you have the ability to get them all done and keep the customers happy. You still have to deduct supplies and taxes too.

[Flash Gordon]

Thanks Flash. I agree the website traffic would be good.

On the "deal" though, it's not just the initial 50% you lose on the deal. You also lose another percentage for the sites fee. so your $75 profit for the headlight resto quickly drops to about $40-50. Thats not bad money for a headlight resto if you get 100 of them, as long as you have the ability to get them all done and keep the customers happy. You still have to deduct supplies and taxes too.

How about we increase the retail value to $500

Just think, if you sold 100 of them and only cleared $200 a piece, thats $2,000,000 in a month

[Flannigan]

LOL I like that math Flash!

[Ted S.]

Welcome to "Why most small businesses fail within a year" 101.

Unless of course this is a hobby-thing. One hell of a hobby-thing...

[C. Charles Hahn]

Unless of course this is a hobby-thing. One hell of a hobby-thing...

If it's a hobby for the person, they have absolutely no business advertising on that kind of a grand scale.

[gumball]

Your better off working at the local carwash for $7.00hr + tips.