The Group Coupon "Is It Worth It?" Calculator

Many businesses are bombarded by salespeople from the latest group coupon website. We've all heard positive stories about companies that have had huge success with coupons, and also the occasional horror story about companies going out of business due to massive losses.

The calculator below is designed to help you make sensible decisions regarding whether your business model is actually a good candidate for the group-buy coupon model. The results will change automatically when you change the input fields.

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Basic Assumptions
Usual Daily Units Sold  
Price Per Item $  
Manufacturing Time Per Item Minutes
Gross Margin %
Likelihood of Repeat Business %

Coupon Info
Max Coupons Sold  
Gross Coupon Price $  
Commission %

Results

With Coupon:
Total Items Sold
Total Mfg Time *
Gross Revenue
Gross Revenue (Less Commission)
Total Unit Cost
Net Profit/Loss

Normally (Within Same Period):
Total Items Sold
Total Mfg Time N/A
Gross Revenue
Gross Revenue (Less Commission) N/A
Total Unit Cost
Net Profit/Loss

Recommendations

* - Estimated time to create/deliver product, based on 12 hour working days, and assuming you don't add additional staff.

Disclaimer: This calculator is intended for illustrative purposes only, and you should use your own common sense (as well as your feel for your own business) in making decisions. The goal here is solely to illustrate how group coupon campaigns may play out, based on your input.




Usual Daily Units Sold

Approximately how many of your product (i.e. the one you are selling a coupon for) do you sell on an average business day?

Price Per Item

The usual price that you sell this item for. If the item is usually sold in a different quantity than the coupon is for, you'll need to estimate the sell price here.

Manufacturing Time Per Item

This can be difficult to determine exactly, but approximately how much time does it usually take to make your product (on a per unit basis) or service? This number should be in minutes.

Gross Margin

This is the internal gross margin on your product or service.

Likelyhood of Repeat Business

If your customers are highly likely to return for repeat business on a regular basis, the "lifetime value" is much higher, and it may make more sense to spend more money (on a per capita basis) to acquire new customers.

This number could also include a situation where you are hoping that people will come to your business for the coupon item, and will also purchase other items at the same time (i.e. a loss-leader).

Maximum Coupons Sold

Most coupon sites allow you to set a maximum number of coupons that are available for sale. If there's no maximum, your loss (or profit) is potentially unlimited. In that case, set a relatively large number here, and then experiment with the inputs.

Gross Coupon Price

i.e. How much will your customers be paying the coupon site for your coupon?

Commission

The portion of the coupon price that the website is keeping for itself. This is usually a percentage, ranging from 20% to 60% or more of the total.