Why Using Groupon May be a Stupid Idea for Photographers

Deal of the day website Groupon is the fastest growing companies in web history and a popular way for local businesses to generate some buzz in their areas, but some independent photographers are finding out the hard way that offering special deals through Groupon might be the worst marketing decision they ever made.

Here’s how Groupon works: local businesses offer a special deal through the site (typically at least 50% off), and people buy the deals directly through Groupon, which takes a 50% cut of the proceeds. Businesses that offer deals may actually lose money from the promotion, but the hope is that the hundreds or thousands of people who take up the offer may become repeat customers and help spread the word about the business.

This type of marketing may work for businesses like restaurants, which can fill up empty tables and generate some buzz about their food, but for independent photographers it might actually be a horrible idea. Case in point: photographer Tim Jones offered a £200 photo package that included a 1-hour on location shoot for £29.

Here’s what he included in the package:

  • 1 hour photo shoot in either the comfort of your own home or another location
  • Every photo taken will be put on CD or DVD in high resolution
  • 20 of the images will be professionally edited and air brushed
  • Also includes one 12×10 framed print, two 10×8 prints, two 8×6 prints, two 5×4 prints, two 4×3 prints, and two 3×2 prints
  • Suitable for marking a special event or occasion
  • Up to three outfit and one background change

Newspaper photographer Andrew Smith crunched some numbers, and came to the conclusion that Jones is actually losing money for each of the 301 people who purchased his package.

Even if this photographer is doing each job to a bare minimum standard, he has committed himself to nearly a year’s work for no money. If that doesn’t sound like good business sense to you then be very careful if you decide to offer a deal through Groupon or any similar site. What may at first seem like success could very easily put you out of business.

Even if Jones does manage to plow through the hundreds of shoots he booked for himself, he still has the difficult challenge of making this promotion benefit his business in the long run. If using Groupon to promote your photography business has crossed your mind in the past, let this be a lesson to you: be careful not to bite off more than you can chew shoot.

Beware of the Groupon piranhas eating you alive! (via dvafoto)

Image credit: Groupon a door by wovox

  • Jenna

    Of course he’s losing money, he’s offering way too much in this deal! Should have kept it simple and then customers would want to buy more prints.

  • rommy

    It’s a bad idea because it’s not a strong repeat business. So the photographer has to rely on the word of mouth of the people receiving this promotion meaning they need to tell their friends. This creates the potential for a big dropoff, not to mention mismanaged expectations on prices.

    Groupon works well for high-volume, high-repeat businesses with fast turnover.

  • ranger9

    How to make money off this kind of promo: Get the subjects out to the location, put away your camera, pull out a gun and rob them. Otherwise I can’t see any way it would work!

  • Mr. Brimm

    This guy is bad at MATH. He really didn’t think it through.

  • Wing Wong

    The groupon offering that his photographer offered was a bad deal. However, that doesn’t mean that the GroupOn model is bad or that photographers can’t profit from it.

    What the person should have offered was a basic portrait/headshot as part of the groupon deal, with a single 8×10 print. All of the other offerings he made as part of the package should have been optional high value items that the customer would have wanted and felt justified in paying extra for.

    The photographer in question either has another means of income, or didn’t do the math ahead of time. It’s more a knock against bad business and financial planning than against Groupon.

  • Andrew MacDonald

    Well said.

  • Drew Church

    Wing Wong,

    The issue here is that Groupon is VERY selective about the deals they allow to run that day. Photographers offering such a small package will not be ran. Simple as that.

    The math behind Groupon for photographers is almost always on the extreme end of “bad” just short of “costing them money.” As others have mentioned, photography is NOT repeat business. You hope word of mouth is excellent, but such a “deal” creates unrealistic pricing.

  • Wing Wong

    The one shot and one print is an example. Obviously, the deal actually needs to be a very good deal. However, it is ultimately the job of both parties to find what works for them, even if that means using GroupOn won’t work.

    In the case of the photographer, or any business, actually, a discount from 200 to 20 is a serious loss leader, especially if the fee doesn’t even cover material costs.

    I also beg to differ that photography is not a repeat business. It is up to the photographer to cultivate it as a repeat business to make it sustainable. A portrait session can and should lead to future portrait sessions for the same customer down the line.

    The goal is not to gain word of mouth through a deal. The goal is to acquire new customers through the deal. What generates word of mouth is the quality of your customer service and the quality of your product. You win over the customers that the deal originally brought in, so these new customers become your evangelist.

    Acquiring new customers will always be more expensive than reselling services to existing customers.

    GroupOn is like any other potential business partner. They offer incredible value, but only if you know what it is you want to gain from the partnership, and limit what you will give up. GroupOn wants deep discounts. If you don’t have the margins to cover said discounts, then it goes without saying that you have little to gain, and a great deal to lose going with GroupOn.

    If you don’t have the margins, you really have to ask yourself, are you pricing yourself appropriately, then? Ie, are you offering and positioning your service in such a way that you are competing on price first? If so, then yeah, GroupOn is not the way to go.

    However, if you are positioning yourself based on quality first, then your price should be set accordingly, and leveraging a service like GroupOn is feasible and potentially profitable.

    Ie, it won’t benefit businesses and operations below a certain size and profit margin. It won’t benefit business models that focus on one job -> one sale.

  • Jeff

    I imagine that repeats are few as well as people don’t hire photographers very often, or not nearly as often as they go out to eat.

  • White Hot Phoenix

    Who knew? Photographers are bad at math.

  • Wing Wong

    ~lol~ Too funny and in some cases… too true. Unfortunately, this isn’t a problem specific to photographers… it is endemic of small businesses and first time business owners. Know your craft/core strength. But also know where you are weak, and in many cases, people are weak when it comes to understanding the financial aspects of their business. The sad thing is, the SBA has plenty of resources for business owners to help them get up to speed on business basics. PPA also has their professional business services/consultancy to help photographers with their business workflow and basically figure out the numbers.

  • Kimberley

    No one says it better Wing. Small business usually hv great talents lack acumen and support. Nothing wrong with Groupon, it’s how you can make it work for you.

  • Paul R. Giunta

    I am thrilled with how mine worked out.  Kept it simple at a decent price.  I didn’t do it for the money but for the advertising which has paid off.

  • Ben Margolin

     I don’t think you understand what Groupon is… it’s a marketing (customer acquisition) device, not a sales service. You’re not *supposed* to make money on the offers, you’re supposed to effectively leverage that initial contact into repeat business. If you can’t do that, then Groupon makes no sense for you (and it seems many Groupon offerings don’t do a good job of this).

  • Amin

    What the hell,  this is killing our photography market. 29 pounds with all that prints. OMG.  I thought I seen it worse. I don’t see how this will bring repeat business. customers will just see u as a cheap photographers

    elegance media