How does a group-buying startup like Groupon earn money?

sorry if this is very basic question but since I haven't used any group buying website myself I don't know how do they earns money? To be more clear:

Does sites like groupon charge merchants in a "per promoted deal" or e.g. fixed monthly charge?
or maybe they have a subscription fee for visitors and buyers? (I know this can't be the case!)
any other way?

Thanks for your time :)

Business Model

asked Apr 24 '11 at 04:48

Ashkanr
111 points

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This seems off-topic for this site. – Tim J 12 years ago

2 Answers

Groupon is taking a percentage on the deal. Let say that you run a business and want to use the Groupon service. Imagine that you sell guided visit to a museum. The price is 50 $ per visitor. On Groupon the price will be 25$, and you will earn 10$ (the rest is for Groupon).

The numbers here are for the purpose of illustrating the general idea, the actual numbers can be quite different.

answered Apr 24 '11 at 05:19

Sylvain Peyronnet
371 points

Thanks a lot sylvainp. Now I understand the model. Do you have any numbers of the percentage Groupon takes? I couldn't find a number on their website. – Ashkanr 13 years ago
In Europe the numbers are negotiated directly with a groupon sales guy for each deal. – Sylvain Peyronnet 13 years ago

Revenue share is based on the individual strategy of the deal sites and Groupon tends to stay around 50/50 with others ranging from that to 80/20 (more for the merchant).

answered May 27 '11 at 05:19

Karuna Beckmann
16 points

Hi Karuna, thanks for your reply. There is an unclear point for me: Do they split the whole transferred amount or just the actual profit for merchant? – Ashkanr 13 years ago
@ashkanr see wikipedia, if i remembered correctly, the actual transfered amount. correct me if i'm wrong – Pacerier 12 years ago