1) “50% off? Not really.”Steep discounts are the cornerstone of the pitch for daily deal web sites such as Groupon and LivingSocial , which promise 50% off or better at a local restaurant, spa, fitness center or other shop – if enough people sign up (and pre-pay) before the limited-time offer expires. But the discount may be much less once you factor in taxes, tip and any un-covered portion of the bill.
Because businesses recoup so little — often just 25% of the voucher price after fees — they have incentive to price deals so you’re forced to spend more, like offering a $30 voucher to a $50-per-plate restaurant or a photo package with just two prints.
“We’re starting to see some price manipulation going on, so the discount doesn’t hurt their margins as much,” says Greg Sterling, a senior analyst with Opus Research. For example, more than 3,000 Groupon users paid $10 for a $20 FTD voucher before Valentine’s Day, only to find prices at the special voucher-redemption page $5 to $10 more expensive than what other visitors to the site saw. Groupon spokeswoman Julie Mossler says the price discrepancy was unintentional, and that customers got refunds.
Read more: 10 Things Groupon Won’t Tell You