Does Groupon Beat Frugality?

A few weeks ago, I put out a call on Twitter and on Facebook for detailed posts that people would like to see. I got enough great responses that I’m going to fill the entire month of July – one post per day – addressing these ideas.

On Facebook, Kimberly asked about “Online daily deals (groupon, living social, restaurant.com) vs. Being frugal and saving all your pennies. Sometimes its 50% off discount but sometimes you end up spending more.”

I’ve only made offhand references to Groupon and such sites in the past, but this is as good a time as any to discuss such “daily deal” sites in detail. In fact, most of the remarks below apply to any form of coupon, but I’ll focus on the “daily deal” phenomenon.

Coupons – In Your Face!
So, how do sites like Groupon and Living Social function? Each day (or so), an offer is delivered to your email inbox. Typically, this offer is in the form of a coupon for a local business or an online business.

Examples of offers include buying a gift card at a local business for 50% of the face value, buying a service (or a package of services) from a local business for a significantly reduced amount, or something similar.

In each case, in order to participate in the deal, you have to buy that item. The email will include a link that allows you to hop onto a website from which you can purchase the gift certificate or package.

So, let’s say that one of my favorite local bookstores participates in Groupon. Groupon sends out a deal one day offering a coupon for a $50 gift card to that bookstore for only $25. I’m a frequent reader, so it sounds like a good deal, right?

Actually, it’s not. Here’s why.

You Don’t Save Money at a Sale
If I buy that certificate for $25, I’ve just committed myself to spending $25 on books. Yes, maybe I’m getting $50 worth of books in terms of their face value, but I’m still down $25.

It doesn’t matter how good the deal is. I’m still sinking some of my money into that deal.

I’ve just spent $25. What I will get out of it is books that I most likely don’t need.

Now that I have this coupon, I have to go use it. This means I have to travel to that bookstore sometime and use the certificate. Unless I’m extremely lucky, I’m not going to be able to hit exactly $50 on my purchase, which means I’m going to have to spend some additional amount or carry around a mostly-used gift certificate in my wallet forever.

So, in reality, I’m spending about $30 for about $55 (MSRP) in books. I also spent the gas to drive over there.

I’m spending $30 on something I don’t really need that I would have never been aware of without that offer appearing in my inbox.

That’s simply not a good deal.

“Well, I Wait for the Good Deals!”
I’ve been a subscriber to two different Groupon areas for the last six months and I’ve yet to see a single offer that actually matched something I needed.

On the other hand, I saw a lot of offers for things I wanted: reduced (but still high) prices on meals and massages and amusement park passes and the like.

Here’s the thing, though. None of these wants were really strong wants. They were things that I might do on a whim with friends, but they aren’t things that I’m planning for in my budget. Often, they aren’t even excellent examples of that type of experience – the restaurants have been a decided mixed bag, for example.

It could be that others have a completely different set of desires than I do and Groupon regularly hits upon experiences that they deeply want to have. For me, they’re just idle temptations, the kind that would easily drain my wallet without thinking about it.

I’d far rather go out once a month for a truly memorable experience than go out once or twice a week for a blah experience – and that memorable experience will (a) still cost less than several average experiences and (b) will never appear as a Groupon temptation.

Why Frugality Wins
The basic idea of frugality is that you’re trying to find the maximum value in the experiences you have in life. It means spending money when it’s something you truly want, but it also means understanding what you truly want and separating that from the idle day-to-day desires we all have.

Simply finding a discount on an experience that you didn’t really want before you heard about that discount is far from finding the maximum value in life. Groupon and Living Social and such services provide a never-ending line of those kinds of minor temptations, and those kinds of temptations are never a bargain at any price.

I’d far rather pay full price on a single experience or purchase that was really important to me than saving $20 on two different purchases that I didn’t really care about all that much. That important purchase was something that I thought about a great deal, enjoyed the anticipation for, and was quite sure that I would really enjoy when the time came. The other was just an email in my inbox alerting me to yet another thing that I might find a bit interesting but didn’t really need.

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  1. Katie says:

    It could be that others have a completely different set of desires than I do and Groupon regularly hits upon experiences that they deeply want to have.

    I think this is true – if I know that I’ll be going out to dinner with friends, say, 3 times a month on average, I know that watching for Groupons to restaurants we like to go to or have been meaning to try makes perfect sense. If I know I want to go to a museum exhibit anyway, buying a Groupon for that also makes sense. If I regularly get spa treatments (I don’t, but I know people who do), why not get a Groupon to try a new thing? If I buy a lot of my clothes at GAP, or buy them at Old Navy because it’s half the price but like Gap clothes better, the Groupon solves that issue.

    That said, I agree that a lot of them aren’t for great places – I try to be careful and selective about that. I’ve found the quality of places offering Groupons to have dropped in the past six month or so in the DC area, at least as per my tastes. I don’t know that that’s universal though.

  2. Julie says:

    My boyfriend and I use these for date nights. We’ll buy for restaurants in our area (we live in Boston, so we will pick the ones that are close to us. We have 4 that we have yet to use). We will get them if we see discounted tickets to plays or museums. Yesterday, we went to a paint your own pottery place, and we spent the exact amount for our coupon. I have a couple of discounted movie tickets that do not expire. I think these sites are good if you buy for things that you know you will use. We won’t buy for a restaurant that is far from us because it means we probably won’t go back again. I think they are fun because we get to try new places in our neighborhoods. I can see how people could go overboard with these sites.

  3. Telephus44 says:

    I agree with Katie that if Groupon (and other sites) have deals for experiences that you already value, then they can be worthwhile. When we bought a house 3 years ago, it ended up being far away from my favorite yoga studio. I have found 2 deals on Groupon for more local yoga studios, so I’ve been using them to try them out. I’ve also bought retaurant ones for places that we already go to regularly, but then again, I value eating out more than Trent does.

  4. Julie says:

    Also, this is how I found my favorite hair stylist. I used coupons for a couple of salons, and I loved the cut I got with the last one I used. His cuts also turned out to be the least expensive since he is new. I keep going back to him now.

  5. Johanna says:

    I subscribe to several different daily deal sites. Over the course of a little more than a year, I’ve taken advantage of them exactly five times. Three were for businesses that I’d never tried before, but had wanted to try for a long time. One was for a business that I *had* tried before, but don’t regularly patronize because it’s a little too pricey. And one was for a business that I’d never heard of, but which offered a product that was an immediate need for me.

    All in all, I’m satisfied with my experience, and I’m satisfied that I have the self control that’s needed to keep from jumping on “deals” for stuff that I don’t especially want. What does bother me a little bit about the daily deals – and about other businesses offering limited-time deep discounts in an unpredictable manner – is that they make it hard to comparison shop. You can’t make a reasoned choice between today’s Groupon and tomorrow’s, because you have to decide whether you want to buy today’s before you know what tomorrow’s is. And with other businesses changing their prices around seemingly at random, it’s hard to get a handle on what you should expect to pay for any given product.

    I know that businesses putting stuff on sale is nothing new, but it seems like there’s been a trend lately in the direction of deliberately confusing the consumer. Has anyone else noticed this?

  6. Other Jonathan says:

    We have only used these sites to buy “experiences,” especially as gifts. My parents are hard to shop for, and they don’t get out much, so along came a groupon deal for a segway rental and we bought 4 of them (for my wife and I and my parents). It was something that everyone was interested in trying (none of us had ridden segways) and we all enjoyed the afternoon out.

    I’ve also bought sailing lessons for 4, 2 fighter-jet simulator experiences, kart-racing passes, speed-boat tour passes, etc. I wouldn’t have done these things without the groupon (wouldn’t have known about some of them), but had a great time doing them and love the spontaneity of the purchases. And they do make great gifts sometimes.

  7. Steven says:

    What is a “truly memorable experience” to you? I can’t really think of an article about how you’ve indulged yourself (which I think would be a good balance to the constant articles on frugality.)

  8. Sarah says:

    Generally I try to talk about any upcoming plans for things with the people around me, so that my best friend (who follows those sites religiously) will let me know if something comes up that matches. For example, I knew I would be taking driving lessons this summer and so I mentioned it in conversation. Not long after, she let me know when a heavily discounted driving lesson came up. Now I can try the school with very little risk. It helps having a strong social network.

    I have the willpower not to give in to those kinds of temptations, so mostly I find following those kinds of sites boring and a waste of my time. I very rarely want something on them. So having a friend that likes to look at them helps me hear about the coupons I’m looking for.

  9. Sarah says:

    If you do decide to buy a Groupon buy it through ebates.com to get 3% cash back.

  10. Daria says:

    I have used Groupon, Living Social, and Eversave. I’ve been very happy. My husband and I had an accounting conference in San Antonio and we had one night that wasn’t being sponsored by a vendor for dinner. Eversave had a deal for a restaurant on the Riverwalk. It came to $27 out of pocket for two margaritas, an appetizer we split, two meals and a dessert we split and that included the 15% tip. I thought it was a great deal for a Riverwalk restaurant! We always go to Schlitterbahn once each summer. We got tickets for us and our 6 kids last summer at 1/2 price through Groupon. This year I picked up our tickets from the local mall because they were half price and included a $25 Visa gift card. Both were fantastic deals. I don’t buy even once a month but if the deal is for a restaurant that we freguent like Maggianos or Texican Cafe, I have picked them up. I will look into ebates.com

  11. Riki says:

    I think Groupon can be a great way to save. I live in a relatively small city (only 30K people) and unfortunately Groupon doesn’t apply to my province. I do, however, keep an eye out for things I might use when I travel.

    Trent’s negativity assumes Groupon followers don’t have the necessary focus to use it as a helpful tool. Obviously lots of people here do.

  12. Hannah says:

    It’s possible to be overly optimistic, and buy a groupon you don’t need. But if you’re smart and only buy for things you already spend money on, it’s basically free money. All it requires is the same amount of discipline you need to use a credit card responsibly.

    I’ve made a few groupon buys that I had to force myself to use before they expired, but most were big wins. I live in a large city, so every once in a while there is bound to be an offer for restaurants that I already frequent or stores where I already spend money, like Amazon, Gap, Barnes and Noble and Fandango.

    That said, I realize that by only taking advantage of the big discounts at places where I already shop, I’m not groupon’s dream customer. I’m not saying I think it’s a good long term business model, but while it’s around, I will keep using it to get free stuff.

  13. Cheryl says:

    In my opinion, things like Groupon (and I must confess to still only having a hazy idea of what it is) are great for people who like doing that sort of thing. Trent has often given similar advice (for example, don’t buy a fixer upper unless you enjoy fixing up old houses). For me, I would absolutely hate using Groupon.

  14. Kristina says:

    I have a list of ‘needs’ or want’s that I’ve decided I will buy, have already passed the 30 day wait test etc. And when a groupon comes up that meets one of those needs, I buy it… if it’s not on the list I don’t.

    Examples of ones I’ve bought are, picaboo picture books, to showcase our wedding pictures, running room discounts that went towards new running shoes, a yoga discount at the studio I go to once a week, a pub discount at the pub down the street from us… on my list right now, is a trail ride, a commuter bike, road bike tuneup and some fall work clothes, a museum exhibit in September – haven’t seen any groupons on these yet, but most don’t have to be bought right away.

  15. jackie says:

    I get groupons a living social deals fairly often. I think they’re great and I completely disagree with Trent. The book example didn’t make any sense. If you weren’t expecting to buy books, then buying the book store groupon isn’t an example of waiting for only the deals that you really need.

  16. Cass314 says:

    It really does depend. For example, I have a certain amount of money written into my budget for coffee, and half of that is usually spent at local shops and the other half buying either drinks at Starbucks (I know–but I know exactly how much I’m spending, and I cut it out and then added it back to a lesser extent because I really did miss it) or whole beans at Peet’s. Invariably, I spend my budgeted amount or very nearly at these places. Discounted gift cards are thus a good deal for me at these places (especially because gift cards do not expire in my state).

    Similarly, I get by far most of my books at the library or the used book store, but there are certain authors whose books I outright buy, and there are certain authors whose books I outright buy in hardcover. These are conscious choices I have made to support these authors because I want them to write more books and I think their books add something to the world (and because I have without fail re-read every one of their books multiple times). If I know there are such books coming up or just released, a discounted gift card to a book store is absolutely a good deal for me (for example, just did that to snap up Dragon’s Path, A Dance with Dragons, and Embassytown, already discounted though the middle one not as much as it was a pre-order, for even less with the gift card).

    Reduced-price gift cards and coupons are a good deal if they’re used consciously. The problem is obviously the large chance they won’t be. I know I might be prone to that problem as well, and I only look at specific categories because of it. But ultimately with self-control (or, intentional blinders so as not to be tempted) they do save me money on wants I was going to spend money on anyway.

  17. Misty says:

    For what it’s worth, a similar service that I signed up for gave me a coupon for a free eye exam plus a $200 credit toward new glasses. I have extremely poor vision, which makes replacing my glasses an extremely expensive proposition at my stage in life (in the neighborhood of $500, not counting the eye exam, even if I buy the most inexpensive frames I can find). In the end, I still ended up paying $200, but I got a $600 eye doctor visit for my $200, and it was something I sorely needed.

    Nothing else has popped up that I have needed, but I’ve seen similar things (such as dental work) pop up that could be useful, if I was in a position to need them.

    I think the trick is to have the self-control to not splurge for the idle temptations that they send you on a daily basis.

  18. Arvin says:

    It’s the same exact concept as having a credit card… if you are already on top of your finances and your spending is in check, it’s just icing on the cake. You need to be smart enough to only spend on things you absolutely were gonna spend on already, at which point you just have to decide whether the inbox clutter is worth it to save money when it counts.

    Personally the 10 dollars I spent on a yearlong LA Times subscription (that I used to get grocery coupons) on Groupon, the 20 dollar Amazon gift card I got for free on Living Social by referring 3 friends, and the 50 dollars I got on a much needed new pair of eyeglasses has made it more than worth it.

    #11 Riki sums it up best, that Trent seems to think that the readers of this site are too dumb to know when to spend on Groupon.

  19. Dave says:

    Trent, once again I can’t help but disagree and be disappointed in the direction this blog lately has gone – you dismiss Groupon as being bad without any insight on how it can be useful. As Arvin says, it’s similar to credit cards – they help you attain things you need/want. What’s important is HOW YOU USE IT. Obviously buying a Groupon deal for the sake of buying a Groupon deal is incredibly stupid – you’re just spending money. However if you make a calculated purchase for a need/want that you would have purchased regardless of the presence of a Groupon deal, I can see absolutely no ways in which this is harmful.

    I would have expected you to dig into this a bit more. As somebody else said, why would you buy a Groupon deal for a book store if you’re not going to buy books anyway? It just doesn’t make any sense to me, and it almost seems like you think that, like Arvin said, the readers of this site are too dumb to know when it’s wise to purchase a mass coupon deal such as the ones Groupon offer. After all, if I’m going to purchase something anyway, don’t using a Groupon deal and being frugal go hand-in-hand? I’d say it’d NOT BE FRUGAL to NOT USE GROUPON for purchases you’re going to make anyway, if you can find a reasonable deal.

  20. AnnJo says:

    Trent’s readership is split between people who are new to having control over their finances and people who are already firmly in control but enjoy reading about it. For the former, Groupons are a bad thing. For the latter, not.

    When you get bombarded by 365 screaming ads per year for a huge variety of products at steep discounts, there’s a high risk to people whose control is weak. I’ve purchased four Groupons in the 15 months, all for places or services I had intended to visit/use before seeing the Groupon. I’m happy with my purchases, but I do see how it could be a problem.

  21. Dave says:

    And AnnJo I think that that’s a good thing to point out – that the reader base is kind of split, but it’s also way too generalized of a post for a non-generalized audience. I think that if Trent is going to take a good, critical look at the benefits and drawbacks of something, the time should be taken to explain its benefits instead of only pointing out the negative side of things. I just don’t think it’s possible to have a balanced, well-written blog that sparks conversation about a subject unless the blogger is willing to take a look at both sides; sure, take a side, but still look at both sides instead of carelessly disregarding the benefits of something that one sees as non-benificial overall for SOME people.

  22. em says:

    @Dave: I agree with you. Trent certainly missed a huge aspect of Groupon. It seems to me that most people who live frugally think about their spending enough to know when a deal is actually a good one. Trents posts are very one sided recently. And not even touching on the other half of topics makes for a bad post in my opinion.

    I personally love daily deals sites. I have used them to get discounted lift tickets for an already planned snowboarding vacation (saved 75% with that deal) and knocked out 4 christmas presents for this year while only spending $15 total. All necessary purchases that in total I saved over $100.

  23. Riki says:

    Do you know what I keep thinking as I read this blog?

    Analyzing everything to death the way Trent wants us to is simply EXHAUSTING. My god, how much fun can that be? Not much. For the record, I am the sort of person who, in the process of purchasing a new furnace, made a spreadsheet with detailed cost comparisons and 5, 10, 15, and 20 year spending projections. And yet I find Trent’s soul searching incredibly tedious.

    Guess what . . . sometimes I just want to buy $50 dollars worth of books for FUN. And I can, because I make sure the “big” spending in my life falls in line with my income and goals so I can just go out and buy a Groupon or eat out or buy name brand clothes.

    I live a pretty frugal lifestyle but I don’t spend every minute of the day waxing about how important my family is and how my values have to be first and foremost on my mind all. the. time.

    I’m just out living a pretty great life.

  24. Dash says:

    I think if you have your finances in order, which thanks to Trent, we’re well on our way, these deal sites are a good thing. Specifically I am signed up to all six in my area, curious of others if you know em. In any case I just browse the deals and when I see something I know would benefit my family why not take advantage. Here is an example, we like taking pictures of our kids, when I just saw a deal for $25 for a photo shoot, 5 pages of photos and a picture CD – why not? The retail price would have been over $150. Likewise it opens you up to new experiences, in an area like Boston there is so much to do, how do you know where to start?

  25. marta says:

    @Riki:

    You are not the only one. I do keep a few spreadsheets, too, and I have got my lists and such… but I feel Trent takes it to extremes I just can’t deal with. I don’t like uber-specific plans for both living one’s life or spending one’s money. Sometimes I just need/want to drink a coffee, and I am certainly not going to stop and think whether it’s actually a want or a need, and how those fifty cents (coffee is cheap here) are draining my wallet and preventing me from having my dream country house or whatever.

    Fortunately, we have got the comments section for other (and more balanced) points of view.

  26. deRuiter says:

    I like Groupon and simiar sites, and use them very sparingly. If it’s a place we were going to eat (we eat out occasionally for social reasons, usually cook at home) I buy the coupons and use them. Like all finance, you have to use self discipline (do I really want this and will I really use it?) and good sense (eating at home is cheaper, healthier, and you’re not likely to have a tubercular illegal alien coughing on your food.) Seemsa from reading the comments that a lot of people buy groupon, use the coupons, and are very happy with them. So many different people, so many different needs / wants!

  27. marta says:

    I take back what I said about more balanced points of view.

    Tubercular illegal alien? WTF?

  28. Johanna says:

    I sometimes wonder if deRuiter actually believes all that bigoted crap, or if it’s just an attempt to get a reaction.

  29. marta says:

    I have no clue. Either option sucks.

    It’s weird how random it feels. She will talk about frugality, and Tightwad Gazette-like tricks, and then BAM, out of nowhere, there will be something truly vile. Xenophobic, racist, classist, misogynistic, doesn’t matter which — one of those spots is sure to be hit.

  30. Brittany says:

    Deliberately ignoring bigotry (don’t feed the trolls…).

    I agree that Trent really missed the boat on this one. Groupons don’t “beat” frugality–they are a TOOL of frugality and should be viewed as such. First, as everyone has pointed out, they can be used consciously to buy things already needed and planned for. (Trent frequently says that buying a book or two a month is part of his “entertainment” budget…so wouldn’t buying a Groupon for books allow him to stretch this budget? Again, this relies on him using the Groupon in place of his regular spending in that area, not just to buy books he wasn’t intending to buy in the first place?)

    Second, perhaps more importantly, it’s OKAY to buy things you don’t “need” if you can afford them (and it is also okay to have a TINY sliver of “fun” budget even if you are aggressively paying off debt or revamping your financial life.)
    It’s frugal to try to get the best deal on these things as possible.

    I subscribe to a couple daily deal sites and frequently read a digest of all of the local ones that a “deals” blog in my city puts together. Do I often buy Groupons(+ others) I don’t “need”? Yes. Do I buy Groupons+ for things I didn’t even consider doing or trying before I saw the deal? Yes. And you know what? That’s okay. In fact, it’s awesome. I don’t have a ton of money, but I’m careful with what I have and I’m not on a super strict austerity budget (on the “life lean to prosper” budget of someone who works for non-profits), so I have a decent entertainment budget for the month (~100, which including all discretionary spending). But even when I was on a super strict budget, I still had a tiny entertainment budget, and Groupon+ helped me stretch that. Do I need to try different restaurants about once a month, go to plays, explore wine fests, see museum exhibits, or go ice skating? Well, no. But I do need a minimum level of entertainment and I want to take as much advantage as possible of living in this awesome city. Groupon+ lets me do that on the cheap. It lets me try new businesses I never knew existed and experiences that were previously out of my price range.

  31. Adam P says:

    Bravo at Riki and a few other posters. Good call. I am sort of embarrassed to eat out at a nice restaurant (if it’s not nice, why not eat at home?) and pull out a coupon–admittedly this is a failing of mine from being raised in an upper class appearances are everything family…which I try hard to get away from. But as what many others have said, Groupon is only bad if you don’t have self control.

    Most of us commenters do, while perhaps a large amount of Trent’s silent readership does not. And it is a valid point that if you have trouble keeping your spending in control, a 50% off coupon will tempt you to buy stuff you don’t need/can’t afford even at half off.

  32. AaronB says:

    I’ve had a VERY different experience with these sites. Usually I just ignore the deals–unless it’s for one of my favorite restaurants. If the groupon is for something you already use regularly, or something you’ve been wanting to try then it’s a great value. I’ve purchased fewer than six groupons–a few to my favorite restaurants, one to my favorite clothing store. I’ve used them all, and I was very happy with all of them!

    Also Trent many of us live near public transportation or walking distance of stores. Just because you’re spending money on gas to go anywhere because you live in the suburbs doesn’t mean the rest of us do! Since groupon seems to be centered around metro areas including the cost of gas in a groupon post is misguided.

  33. Katie says:

    Okay, having thought about it, I’m wondering if some of the objections to Groupon evinced in this post aren’t the result of associating frugality with effort with morality. That sounds attenuated, but in essence, the mindframe seems to be that it’s the lack of consumption, the effort being made that makes frugality the right and moral decision – consuming two books is worthier than consuming four books, even if the two cost the same as the four. This seems to be a bit of the underlying attitude in this blog sometimes, and I think it’s a fallacious one. Frugal decisions can tie in with moral ones, but forgoing buying or consuming something for the sake of having forgone it isn’t, in and of itself, a morally better decision than the reverse.

  34. Vanessa says:

    Trent said: “I’d far rather pay full price on a single experience or purchase that was really important to me than saving $20 on two different purchases that I didn’t really care about all that much.”

    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.

  35. Mister E says:

    “Simply finding a discount on an experience that you didn’t really want before you heard about that discount is far from finding the maximum value in life”

    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!

  36. jackowick says:

    A lot of Groupons are for service related businesses (the skydiving, dancing lessons, restaurants, etc) that I would not normally spend money on; the Groupons are intended to drive repeat business. If you get someone in the door, they are more likely to return. So Groupon is great if the activity is one you regularly use or want to try.

    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.

  37. Riki says:

    #33 — Katie

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

  38. I think an interesting post for Trent to write and us to ultimately dissect would be the overall trend in ‘cheap’ and couponing that now goes on in our society and drives sites such as Groupon! I know the ‘idea’ is for folks to buy a discount “groupon” and then the businesses hope you like them and come back. I would definitely say however, most users fall into the category of “I’m only buying it because it’s cheaper and I’ll never visit again unless you have another coupon”. I have done that, I am not ashamed to say. I got a full-body massage for Mother’s Day off Groupon and I’ve never been to the place since! It was worth that price but I’d never, ever pay full price to have that done so they won’t get repeat business from me. Overall I am curious how this will effect the overall economic situation. It’s also why I will never put up a Groupon for my own company. I don’t have a retail store and I can’t afford to attract that type of customer. I would actually say a lot of other businesses will regret running Groupons over time.

  39. AnnJo says:

    @Melody, things like coupons, Groupons, $5 off when you buy 10 items, etc., are all ways for businesses to maximize revenues while targeting different shopping groups.

    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.

  40. Helena says:

    The idea is if your were going to get or do whatever the groupon is for than you get a deal, if not you are wasting money. I love a coupon if it is something I am already going to get.

  41. Pat S says:

    If you were going to buy it anyways, then Groupon rules.

  42. Liz says:

    Sometimes Groupons really do fill needs– an Old Navy deal showed up, just as I was getting ready to replace a bunch of worn out work clothes. Did I spend more than the Groupon? Yes. But I spent within my allotted amount, maximized with clearance items and saved some extra with the Groupon.

    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.

  43. Mister E says:

    #38 Melody,

    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.

  44. Brittany says:

    It sounds like your friend made a poor choice for his business–he oversold for his capacity (most deals allow businesses to put a cap on the number of deals available, and this seems to be an underutilized feature), gave a very large coupon, partnered with a deal site that took a very large cut, and did not issue gentle reminders to customers to tip on the full value of the meal. I’ve seen these deals be good business strategies for many companies, but it’s not always a good fit and requires careful planning on the business’s part.

  45. Mister E says:

    Yes, I’m sure that there could be benefits for some businesses under certain circumstances, but my friends experience was quite negative and I thought it worth sharing after reading Melody’s comment.

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

  46. elyn says:

    I’m not sure why this has to be an either/or situation. We’re frugal here, but it costs nothing to get the daily emails from the daily deal sites. We’re planning on planting a fruit tree when our second child is born, and lo and behold, the local daily deal had an incredible, more than 50% off coupon at the nursery we use for sale one day, expires just around the due date. We got a $20 gift card for Whole Foods for $10 on another site- we shop there anyway. You can be frugal AND use these sites- no one makes you purchase the coupons that you wouldn’t normally use if the site didn’t exist.

  47. jim says:

    I agree with Brittany’s comment #30. Its not either/or choice between Groupon or Frugality. You can use Groupon in a frugal way.

    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.

  48. Gretchen says:

    I’ve heard several stories (maybe on the news, at least one from serious eats dot com) where, from the buisness owner’s standpoint, they weren’t as great as they thought and won’t be doing them again.

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

  49. Gretchen says:

    Offers for yoga… etc.

    I haven’t bought any.

  50. Dave says:

    @ Gretchen (re #48)

    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.

  51. Anitra says:

    I’ve seen quite a few tempting Groupons in my inbox, but I pass on them unless it’s something that my husband and I already want to do. We’ve cut way back on sit-down restaurant visits in the last 2 years, so if we see a Groupon pop up for a restaurant that we already like, it allows us to stretch our eating-out budget to get a nicer meal instead of fast food.

    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.

  52. Amazonite says:

    I’ll chime in with my own experience. I’m sure there are some people (and Groupon counts on this) who purchase frivolous things they wouldn’t normally buy with Groupon, or who buy Groupons and then never redeem them. I’ve bought really boring things like car washes for half price at the car wash I normally use, or an oil change and tire rotation for half price.

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

  53. Bonnie says:

    Trent, this article was either slapped together very quickly, or you simply don’t use Groupons and don’t know much about them. Just like any other coupon, if you’re buying the item simply because you have the coupon and not because it was something you were previously planning to purchase, it ends up not being a good deal. But, if you’re already planning to purchase something and you wait for the best deal (just like coupons, not all daily deals for the same item/service have the same value) before purchasing, isn’t that considered frugality? Also, I agree with a previous commenter that the book deal was not the best example, because if you already know you’re going to buy books in the future (prior to Borders’ demise, I probably spent half of my “miscellaneous” budget on books), wouldn’t it be smart to buy the half-price Groupon?

    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”.

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