Second, you didn’t even point out the biggest drawback with using Groupons: the fine print. Now that businesses are getting more savvy about marketing with Groupons, they’ve started putting all kinds of stipulations on the use of the Groupon. I’ve seen many lately that say “only M-Th” or “only lunch”, or “may only be used on x bundle and not standalone items”. And then you have those, such as the last Old Navy groupon extravaganza that expired in a month and a half. Some people, who don’t bother to read the fine print, end up thinking they’re buying a groupon for one item/service, when it’s actually for another.

The other biggest drawback is that you have to know the regular price of the item/service you want to purchase before buying the Groupon. For example, if the Groupon is $10 for a $20 certificate to a restaurant, but a meal there normally costs $50, then you’re really only getting a 20% discount. In that case, you have to decide if that 20% discount is worth it to you. If it’s a new restaurant, probably not, but if it’s one of your favorites and you rarely see deals for it, then perhaps it is.

Anyway, Trent, I would’ve expected a well-thought-out article to have addressed the two main drawbacks I pointed out, not just the lazy old “coupons promote spending on items people wouldn’t normally purchase”.

Definitely don’t think it’s a fair statement to say that Groupon is the antithesis of frugality.

It has also forced us to do some planning for experiences that we’ve said “Hey, we should do that sometime” – if it pops up on Groupon, we can do it for 1/2 price, and now we have the money already invested, so we’ll go ahead and actually plan for it. (Just this week, we finally brought our kids to a real, live baseball game with our local Can-Am team. We’ve been talking about doing that for a year, but hadn’t actually done the legwork on it until I saw a Groupon for it.)

The one exception has been when I used Groupon to buy my husband a Father’s Day present. It’s an experience that I know he’ll like, but I didn’t even realize it existed until I got the Groupon email about it. And it’s definitely NOT something I would buy at full price.

Groupon takes a HUGE cut, I believe around 50%; so a company that offers $100 of merchandise for $50 sells these $50 coupons through Groupon, of which Groupon takes $25. So really that’d be $100 worth of merchandise being sold for $25. This can absolutely KILL some smaller establishments if they’re not prepared to deal with that, because most likely it’ll probably result in a net loss. What they have to bank on is being able to weather that storm, having some repeat customers, and/or people spending more than the amount in the Groupon to make up for any sort of loss.

So from a business perspective I entirely understand why it may not be as conducive as one might think without looking at it first.

I haven’t bought any.

Mine always seem to be for yoga or hair straightening or the like.

My experience with such coupon deals has been good in general. I’ve made 3 purchases total. Got $20 at Amazon for $10. I got $50 at Nordstrom Rack for $25. And we got $40 at a restaurant for $20. Amazon deal was like putting $10 in my pocket since I use Amazon a lot. The restaurant was marginally good deal since it was lower priced place and there wasn’t much on their menu for $20 so we had to order extra stuff we wouldn’t have bought otherwise. Still, it wasn’t a rip off and we did save some money, not just the expected 50%.

But I do see Trent’s negative points about such deals too. Almost all of the coupons offers I get are for junk I really don’t need. Sometimes the great sounding deals aren’t that great and the daily emails can entice you to spend. I recall seeing a great sounding deal for massages that I thought I might buy for my wife. But then I looked at the website and the deal wasn’t much better than their regular specials and wasn’t much cheaper than competitors. I got a coupon deal recently for photography that was like 90% off but their price still isn’t cheaper than SEars or Olan Mills regular specials. POint is that you do have to be careful with the deals and make sure they are really good deals and that competitors aren’t cheaper than the discount price.

But if used right they do give you some great deals.

I mean look at the coupons in your Sunday paper. Obviously you don’t want to use them all. Many of the coupons are for over priced brands that have have cheaper alternatives. But this doesn’t mean grocery coupons aren’t effective frugal tools.

I never understood why he partnered up in the first place since, as I say, his business is long established and strong.

Further to regretting the Groupon experience, I have a friend who owns a lobster and seafood restaurant and agreed to do a Red Flag Deal whereby the purchaser received an $80 credit for $40. His cut was half of the $40 so $20/purchase.

They sold several hundred of the things and he was lined up out the door every night for months which sounds good but was actually a huge problem. The regulars couldn’t get tables (he’s been in business for decades and does a brisk business already) so they were upset, the waitresses were working harder for less money as customers by and large weren’t tipping on $80 but only on whatever amount they went over the coupon value so they were upset, and finally at an $80 outlay for a $20 revenue he certainly wasn’t making any money and so he wasn’t happy either.

That’s a lot of unhappy people and for the most part the coupon-holders haven’t converted into repeat regulars. Really it was a losing situation in multiple ways and if he had it to do over, he would not.

As someone else pointed out, it can also help me maximize my spending in my entertainment/fun money portion of my budget. As long as I keep my total within the budget, it’s all good, even if I do spend more than the face value of the Groupon.

Some people pay little attention to price, and rarely is that because they have tons of money. Mostly it’s laziness and/or foolishness. They buy what they want, when they want it, and can’t understand why they never seem to get ahead financially. Call them extravagant shoppers.

If businesses set their prices to appeal across the board to value shoppers, they’d be leaving a lot of extravagant shoppers’ money on the table. Instead, they price higher than a value shopper will pay, but offer a way, usually one that involves a little planning, thought and/or work, that a value shopper can buy the product at an acceptable price.

It’s a win-win for the business and for the value shopper. The extravagant shopper is going to lose, but then, lazy/stupid probably SHOULD cost.

I think you’ve made an excellent point. This blog is filled moral judgements disguised as frugality tips.

That said, the ONLY Groupon I ever did was a one time ebay gift card for half off. I do a lot of ebay stuff so it was like finding money. Otherwise, Groupon has zero interest from me. I agree; Frugality beats Groupon. Groupon beats scissors.

What if you find a discount on an experience that you DID want before?

We’ve been getting the Groupon emails for about a year and twice they’ve been quiet handy as we were intending on making the relevant purchases anyhow (one of them saved us $70 that we WOULD have spent otherwise!) The rest of the time they’ve been for stuff we wouldn’t normally do and so..we still don’t do it!

I don’t understand this black/white, either/or dichotomy. You don’t have to choose between the two. Are you seriously saying that you wouldn’t jump at the opportunity to save on an experience that was meaningful to you?

The other day you were talking about using frugality to beat inflation. For some people, as Brittany and others pointed out, Groupon can be a tool of frugality. I don’t even use daily deal sites, but I recognize that used wisely, they can offer value.