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..]

Considering A Group Buying Deal? You Might As Well Be Working For Free

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.

  • dan

    pffff! this may work for passport photos. No real photographer can use this crap.

  • http://trinitydigitalmedia.com sempei13

    I shot a video (actually several) for one of the group buying services (one of the major ones you’ve heard of) and one was for a portrait photographer. Since I’m a videographer, I was curious about his experience.

    He had NOTHING but good things to say and suggested I dream up a deal, not for the deal itself, that’s crap. No, he had a high percentage of return customers, so in effect, this was just an advertising scheme which will, of course, cost you money, but the ROI was good, for him at least.

    I admit that they sent me satisfied customers, but the point of these isn’t that you always sell your work for this pittance, but that people who didn’t know about you now will, so the next time they need a photographer, you’re on the list (at full price).

  • Dave

    It’s called a loss leader folks. It gets people into your studio and in front of your lens so that you then have something to sell to those clients. One of the first things I learned when I went to work for a photography studio is that we are not photographers. We are sales people. The product we sell is photographic images of our clients. But you have no inventory to sell until you get the client in front of the lens. Anything that you can do to get them in front of the lens is a good thing.

    These group deals can be very profitable for a studio. First you get an influx of cash, second you have a large number of future clients that you can then create product to sell to. You don’t try to shove them all through in the least amount of time – that guarantees that you will fail. Treat each of them as if they are a real client (because they are) provide them with your full service, and put them through exactly the same process that you put the rest of your clients, (I’m just assuming here that you project images and do a full sales session) and guess what. They will buy.

    Now maybe they won’t buy at the same level as your regular client, and you will get some that will only take the deal and run. But in the end when you average all of the numbers out, you should have made a substantial profit.

    That is, if you are priced for profit in the first place – you don’t just throw the images up on an online gallery, and give away the digital files.