Daily Deal Websites-How Do They Work?

Posted on March 14th, 2012 by Discount Debbie

Are you signed up for your local Livingsocial, Groupon or other daily deal website? If not, make sure you do because you are missing out on some super savings. I have seen some deals as much as 90% off. About a year ago, I bought a day at the spa which included a facial, pedicure, manicure and massage for only $99! Crazy huh? I thought this was such an exciting industry that I started working for our local daily deal website.

(BTW, this is a real deal going on right now! Just follow THIS link to the online Groupon deals)

When you get these great deals, have you ever wondered how they worked? Or even why businesses are doing these great deals. I’ll let you in on all the secrets. Well they probably aren’t secrets, but at least you’ll know now 🙂

All of these daily deal websites work by taking a portion of what is sold. Most of these websites have a bottom line and require the businesses to at least give a 50% off discount or more then they take anywhere from 30%-55% of what comes in. Some businesses only make about 10%-20% of their original price! Sounds pretty steep huh? However, these businesses use this as an advertising tool. Regardless if someone buys the deal or not, their company’s info goes out to thousands of people.

So to break this down…
Local salon wants to do a cut and color deal.
It’s normally $150, but the daily deal price is half-off at $75.
The daily deal website takes 45% at $33.75.
That leaves $41.25 to the salon.

That’s a pretty big difference from $150. However, any other form of advertising will only cost money whereas this one at least brings in some money.

Do you buy daily deals? Tell us about your best one!



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