Considering A Group Buying Deal? You Might As Well Be Working For Free
We are familiar with Groupon or other group purchase services from the buying side. Those services offer you a pretty cheap coupon to get an item, or a service for about half the price or sometime even less provided that enough buyers hope on the deal.
[If you have never bought a Smartphone case from them raise your hand. No hands? good, you know what group purchases are. let's continue..]
But how do those deals looks from the service providers side? Specifically from a photographer's point of view. Photographer JP Danko of blurMEDIA photography was recently approached by a group purchase service to offer a full session coupon for $29.
Here is what they were offering to the photographer:
"Lets review – for a purchase price of $29, a person who bought this group buying deal would receive:
- A photography session for up to 5 people.
- One 8×10 or two 5x7s or eight wallet prints
- A CD with high resolution copies of three photos
- 30% off of anything else I tried to sell them.
There is a full analysis on JP Danko's site about the real cost to the photographer on this deal (about $1450) and the hourly rate he'd get if this campaign were to succeed ($0.11).
Here is part of the analysis that JP makes:
at a 70% redemption rate, the best case time plus cost scenario for this group buying deal works out to a photographer working 75.8 hours (full time for nearly two weeks) and spending $245 out of pocket in order to earn $1450 of income.
Over that 75.8 hours, the photographer will also burn through about $360 worth of overhead too.
That leaves the photographer with a best case scenario hourly rate of about $11 per hour ($1450 income, less $245 in expenses, less $360 in overhead, divided by 75.8 hours). ...
... The worst case more realistic scenario works out to an hourly rate of $0.77 per hour ($1450 income, less $770 in expenses, less $585 in overhead, divided by 122.5 hours).
It turns out that while those deals are kinda shabby for the photographer, they are quite bad for the customer too. Since the photographer is getting a fixed sum, their way to maximize earning is by providing crappy "school picture day" service.
You can read the full analysis backed up by some hard data, examples and some interesting language over at blurMEDIA Photography.
I would love to hear your thoughts, either as photographers or customers (or non-customers) to those $30 coupon deals.