Groupon deals that leave you wondering,”what is this photographer thinking?”

Local Photographer does a bad Groupon Deal in my opinion

This week here in the Dayton market there is a Groupon offer that leaves me wondering. Don’t think that I don’t like Groupon offers. I actually buy one now and then, but I also understand that some businesses can be hurt by an offer not thought through. I work with businesses on their advertising every day so I have a blog GROW YOUR BUSINESS IN DAYTON where I share about ways to grow your business in Dayton. I’ve had discussions there about Groupon.

Example of a business hurt by Groupon

Here is a story in Entrepreneur magazine about a Groupon gone wrong for a small business: Groupon offer hurts a business

Why do I think this local photographer’s Groupon deal is a bad deal for the photographer and the client?

The reason that I am posting this discussion here on my photography web site is because the Groupon that I noticed this week was for a local photographer. The photographer is offering a $150 session that includes a minimum of 50 retouched high-resolution images on a CD along with an on location session of up to two hours up to 30 miles distance from Dayton. They are offering the session for $59. Now if you know how Groupon works, the photographer will only get about $29 for each of these sessions. The rest of the fee is the cost of advertising on Groupon. So not only do you start out with a discount of 50% or more from your regular rates, but then you receive only half of the advertised amount as a business.

So why is this such a bad offer? As of this moment the photographer has sold 147 sessions and will be receiving a check for over $4,000.00 from Groupon. That is a lot of money, and the photographer’s web site is likely getting a lot of traffic from the promotion, however when you start to do the math things start falling apart. The paid in full sessions must be booked within the next six months. Now, just so you know, I know photographers that have done well on Groupon because they had it set up so that they could up sell the customers after the session (Note: Up sell is a good thing. It means they had something in addition that the customers wanted to buy. I am not in any way suggesting that any business use bait and switch or any other underhanded practice)

Here are the some of the problems as I see them with this photographers Groupon offer:

1) First is the value of the photographer’s time. They may be driving 30 to 40 minutes to some sessions and of course once you get there you have to come back home again making some round trips 60-80 minutes. They have offered a session of up to 2 full hours. $29 divided by three hours (session plus one hour travel time) is less than $10 per hour for the photographer. But wait…

2) The photographer has offered a minimum of 50 retouched images on a CD with a copyright release for the customer so that they can have their prints made anywhere they want. Let’s assume that the photographer plans on spending between 30 seconds and 1 minute per image retouching the images on the CD, that’s another hour of labor and represents minimal retouching (I usually spend several hours sorting, adjusting, and retouching the photographs from one of my portrait sessions) To the three hours above add another hour. Now the photographer is making about $7.25 per hour for their photography.

3) With Groupon, it can be helpful to businesses that have an up sell or with companies that have high repeat traffic. An example of an up sell is Arthur Murray Dance. I purchased a package on Groupon at a very low rate to learn to dance with my wife. After two private lessons and a group dance we had such a good experience that we purchased another package of lessons (3 to 5x the original investment). An example of high repeat traffic is a restaurant, a hair salon, or perhaps a massage therapist. In these examples, if you have a really good experience you are likely to come back and pay regular price over and over again. With this photographer’s offer there is no opportunity for up sell. All the images are going to be provided to the client on a CD so that they can go to Wal-Mart and have them printed or put them on their Facebook or whatever without paying any additional fee. Unlike restaurants or hair salons, photography is not something that most people buy every day or even monthly so you cannot make up the business with high frequency repeat business at your regular prices.

4) In order to get all these sessions scheduled within the next 6 months, this photographer will be booking several sessions during popular hours each week. They already have 147 two-hour sessions to book. This means that there will be less session times available for other clients paying full price for their services. Since this photographer is priced very low to begin with, I don’t see that they are sustainable rates for someone who wants to make a living at photography, it is a double whammy. On some sessions they will be making less than minimum wage, for other non-Groupon sessions they will be making just a little bit more, but not enough to sustain someone who has to make a living in photography. Based on the current sales, this photographer is spending at least 3 hours of each day for 24 days each month working for less than minimum wages. (Update: The Groupon offering was available for 2 full days and at the end closed out with 173 two-hour sessions sold, so now the photographer will be scheduling 29 sessions per month for the next six months. As a location photographer most of these customers will be waiting for things to green up and get pretty in April and May so the photographer will likely have to grant extensions in order to get last-minute sessions into the schedule).

5) All of the above does not take into account any COSTS OF DOING BUSINESS which include things like purchasing, repairing and insuring equipment like lenses, cameras, and computers. Other things that go into the cost of doing business are programs to keep track of your business for tax purposes, time to maintain records, cost of vendors license, ongoing education and training, professional organizations, advertising, business cards, gasoline, and much, much more.

6) Given that the customers will be having prints made at various non-professional labs and are buying the service based on price alone, many will be disappointed with the portraits that they receive. People who tend to buy based on price alone usually have unrealistic expectations for the quality or the service they are buying and for this reason will be disappointed. I always encourage people to select a photographer, not by price alone, but by the style and reputation of the photographer. If I purchased cars and trucks based on price alone, first I would not own a Toyota Tundra to pull our horse trailer with, and second, I would be very frustrated and constantly disappointed with extra repairs and other things related to the quality of the vehicle and its ability to pull a trailer full of horses. Just as with a truck, with photography you have what you purchase for many years, you have to live with what you purchased for many, many years. Like with my truck, I can be pleased that I spent a bit more for many years or I could be regretting that I did not spend more on a better product or better result for many years.

7) Taxes on the sales. Since the customers are buying the gift certificates from Groupon there may not be any local sales tax due (not sure quite how that works), but come this time next year this photographer will be getting a FORM 1099 from Groupon in the amount of about $5000 which will have to be reported on their income taxes of course. There goes another % from the earnings from this offering.

I don’t anticipate a positive outcome for this Groupon photographer

We shall see how this pans out for this photographer. I do not anticipate a positive outcome. With all that I have invested in providing great quality images for my clients, less than minimum wage is not something I would consider. I want to be able to do portraits for years to come and I want my customers to be more than happy with the results that I provide. If you look at my testimonials page, you can see what I expect to provide to my customers. If you look at the prices page you will see that I offer a complete money back guarantee.

I value my work as do my customers and clients. Too many photographers today lack an understanding of how to make a business profitable and they undervalue their work. Too many photographers are insecure about he product they offer such that they only way generate business is based on low price. In some cases, their insecurity is well founded because their quality of product is low. In other cases, they just don’t know better. Some time soon they typically find that, to their surprise they cannot sustain a business based on their business model and prices and they soon give up and go work at Wal-mart where they can work for minimum wage (and get raises) instead of losing money in their photography business.

Hopefully this post will shake up some of the new photographers coming up and help them to know that they should have good quality of product AND a good understanding of business before they put their shingle out “open for business”.

Can a photographer construct a Groupon promotion with a good result? YES

Not every Groupon is bad business. Hudson’s Design Studio in Seattle WA ran a great promotion on Groupon which they discuss here on a Marathon Press webinar. If you are a photographer considering using Groupon, a small investment in watching this webinar would be of great value to help you construct your offer and information in a way that generates consumer interest and provides you with a profitable response for your business. http://www.marathonpress.com/webinar/1053658224/ As I recall Marathon Press webinars are pretty economical ($25-45 perhaps, but not sure).

3/31/2011 – People have sent in other blogs and information that may be of interest. Visit these discussions:

http://www.shotinvancouver.com/vancouver/tech-talk-for-photographers/breakdown-of-a-photographers-groupon-deal-65000-moneymaker-or-madness/

In the comments, the photographer chimed in. In this promotion the photographer gave several LOW RESOLUTION Facebook files and several 8x10s from the session. On 95% of the sessions, they were having up-sales of additional prints and products. Where this session looks pretty scary, at least there were up-sale pathways.

Peter DeMott • Peter DeMott Photography • peter@photosbypdemott.com • 937-478-6222

Related posts:

1. Learn how to run a Groupon deal for photographers that works
2. One of my favorite photography blogs by Jeff Smith photographer and author
3. PPSO June all day workshop by Ken Kneringer PPA Master Photographer (2010)
4. Dane Sanders to visit the Dayton area author of Fast Track Photographer
5. As a photographer you should know the difference between copyrights and model releases