Monday, January 17, 2011

Saving Money with 50% Off Deal Sites

This weekend, we've used 3 different restaurant deals we got at Groupon or Living Social, for a total savings of $43 on 3 meals.

While there are many more deals we think about purchasing, we find that we save the most by only buying deals for places that we already go regularly and only buying one deal at a time.  Although, there are some deals we've considered buying multiples of and kind of wish we had done so (especially when we like the place enough to use the deal the very next day).  But, I know why businesses like sites like Groupon and Living Social, and it's simply because they make money off the deal. 

Here's how it works:
  1. They are guaranteeing sales.  By having you purchase your meal upfront, they know they have the sale whether you redeem your certificate or not.
  2. You've paid but if you don't claim your deal, you can lose it. Most 50% off deals expire in 6 months.  These aren't gift certificates with no expiration date.  If you don't use it in time you will lose it.
  3. Chances are you will spend more than your certificate amount.  Keep in mind your certificate does not include gratuities and often there are particular exclusions to the certificate (whether it be certain days or certain items).  So be sure to read the fine print before you purchase.  I recently read on another blog a complaint from a young woman about a 50% off deal she purchased for a hair salon.  The certificate was $25 for a $50 hair service, the problem is that her hair was long and therefore didn't fall into the $50 hair service price range.  If you are looking at a deal for a service, make sure you look at it just like you would a restaurant, the certificate covers the amount stated, which may or may not be enough to cover the full service.
  4. Recidivity Rate - the #1 reason that businesses would sign up for a deal site like this is that they know that a certain (and typically pretty high) percentage of users won't use their certificate at all.  The highest percentage of users will use their certificate on the first day it's available to them.  However, by making it not available to you until the day after you purchase it they actually decrease this percentage a good bit.  After that first day the % of people who won't use the certificate at all goes up exponentially.
So if you are going to purchase deals on Groupon or other similar sites, make sure it's for something you will use very soon after you purchase it, and don't purchase deals so often that you end up with a backstock of deals that you have to use before they expire. 

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