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
- Expiration Date – Set the last day of your deal to a slow day...
- Quantity – Know the capacity limits of your business...
- Price – Determine the minimum price to cover cost...
- 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 > COGSMaximize Overspend
1. Overspend = ACS - Value of Offer
2. Value of Offer < ACSKnow Your Capacity
%Utilization = X%, Customers/month = Y
1. Quantity Available (per month) < Y/X
2. Cap on Offer = (Y/X) * (#of MOnths)