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Groupon and LivingSocial ROI Calculator

Fill out the form below to calculate the ROI for daily deal promotions with services like Groupon, LivingSocial and Google Offers. Hover over the help icons for instructions and advice.

1. What is your average ticket?
?
This is the average $ amount per transaction you get.
2. What is the promotional value?
3. What is the price being charged for the voucher?
4. What % is your share of the revenue?
%
?
Advice: This number will likely be 40-60%. I've heard numbers as low as 0% and as high as 75%.
5. What % are you paying for credit card processing?
%
?
Advice: Groupon charges you the processing fee even on its share of the transaction. You should be able to negotiate this away. Other deal providers don't charge this.
6. What is the tax rate %?
%
?
This should include all sales tax, food and beverage taxes and city taxes, but not income taxes. Daily deal providers hold you responsible for sales tax, even on their share of the transaction.
7. What is your % cost of goods or services?
%
?
This should not include profit. This should be the incremental cost for each customer. For a restaurant, this would be the cost of food.
Advice: The 30% default value provided is for a restaurant.
8. What % of your daily deal voucher users do you think will be existing customers?
%
?
This is one of the biggest risks of running a daily deal. To the extent that existing customers use a voucher you lose money.
Advice: Do not promote your daily deal to your Twitter or Facebook following.
9. What % of new customers do you think will come back?
%
?
Make your best guess here. Ask friends in similar businesses who have run daily deals about their experiences. Be conservative.
10. How many times do you think those customers will come back in the next year?
?
You can base this on your existing customer visit frequency. Be conservative.

 Do not change the numbers below unless you are confident you have better data.

11. What % of voucher price do you think will need to be set aside for dealing with fraudulent redemptions?
%
?
Some customers will print multiple copies of the voucher and use them or give them to friends.
Advice: Use an online tool such as the Web site or mobile phone. Crossing names off a list increases likelihood of fraud.
12. What % of the voucher price do you think you'll have to spend on refunds for customer service purposes?
%

Simplifying assumptions:

  • No marketing value is assigned for the email blast; given that daily deals are supposed to drive customers, all value is assumed to be in actual traffic.
  • It's assumed that all vouchers are redeemed for exactly the redemption value. If the customer pays more or spends less, you can improve your margins.
  • No value is assigned to cash flow. This cannot be modeled because we don't know when redemptions would happen.
  • No value is assigned to unredeemed vouchers. This is because we assume that the merchant is on the hook for the face value for gift cards and escheat.
  • The model assumes that sales tax is based on the price the customer paid for the voucher and is not separately charged to the customer.


Programmed by BannerView.com, concept and calculations by Rakesh Agrawal http://blog.agrawals.org