In my previous post Putting A Cap On Vouchers, I stressed how important it is to limit the number of deals to run. It will help local merchants not to get caught up with high potential loss in running a daily deal.

As I surf the net today, I stumbled upon this very interesting and informative case study and a guide to making daily deals work for your business. Author Emily (of dealupa.com) emphasized 4 must-have elements to designing a profitable deal: (read from original source)
  1. Expiration Date – Set the last day of your deal to a slow day...
  2. Quantity – Know the capacity limits of your business...
  3. Price – Determine the minimum price to cover cost...
  4. Terms/ Restrictions – Offer deal for new customers only...

The Dealupa.com author also added a case study wherein she laid out a sample computation to have a profitable deal offer as well as deal offer with high potential loss. Check it below:

How to price: (read from original source )
COGS - Cost of Goods Sold
ACS - Average Customer Spend

1. Offer Price - COGS > $0  or
2. ACS - Value of Offer + Price > COGS

Maximize Overspend:
1. Overspend = ACS - Value of Offer
2. Value of Offer < ACS

Know Your Capacity:
%Utilization = X%, Customers/month = Y
1. Quantity Available (per month) < Y/X
2. Cap on Offer = (Y/X) * (#of MOnths)

R E C O M M E N D E D   D E A L S

5/14/2012 04:57:48 pm

I will send this info to my friend who owns a restaurant. This can put some insight on how she is to proceed with the advertising of a deal.


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