That Groupon deal you got – turns out it may not be that great

Right now the big hot talk on the web when it comes to startups is centered around daily deal sites like Groupon and LivingSocial and they have been making a lot of money, or at least they say they have, based on the idea of talking businesses into giving their members deals on products and services, or at least what are suppose to be deals.

When it comes to looking at who is benefiting the most from these type of daily deals much of the attention is focused on the companies offering the deals but not much is asked about whether the deals for the consumers are really that much of a deal.

A new case study from a site called, an online marketplace for local services, took a look at this whole daily deals thing from the consumer point of view to see if consumers were indeed getting any deals.

Well it turns out that, surprise, surprise, not so much.

One of the examples used was a recent daily deal via Groupon for a voucher for housecleaning service in Phoenix at a “supposed” discount rate of $24.50. Now Groupon claimed that the normal hourly rate for the service was $75.00, however it turns out that the hourly rate for housecleaning in Phoenix is closer to $23.50.

On September 19, 2011, Groupon offered two hours of home cleaning services in Phoenix for $49 – a stated discount of 67% from a regular price of $150.

As of today, 126 home cleaning companies in Phoenix have listed themselves and given their hourly rate on Thumbtack. What’s the average hourly rate of these cleaning services in Phoenix? $23.50.

The average rate of house cleaning services in Phoenix is $23.50/hour… yet the “deal” purchased on Groupon by more than 500 people is for home cleaning services at $24.50/hour, discounted from a ‘normal’ rate of $75/hour.

We also took a look at the last fifty bids that have come through our site on jobs for home cleaners in Phoenix. Of these 50 bids, 22 were below the city-wide average of $23.50/hour, with a low bid of $17.50/hour.


And this kind of shady accounting isn’t limited to just Groupon either as found with a recent deal from LivingSocial

July 19, 2011: Livingsocial offers interior painting of one 12?x12? room for $150 in Boston – a discount from a regular price of $800. We asked five Boston painters how long they thought it would take to paint such a room, and the average of their responses was 4 hours. If it takes 4 hours for a pro to paint a 12?x12? room, that’s $37.50/hr, a discount from a regular rate of $200/hr. The average rate of 34 Boston interior painters listed on Thumbtack? $35/hour. The low rate we’ve seen recently by bidding? $30/hour.


It’s amazing how, with the right marketing, people can be convinced they are getting a deal when in fact they are getting screwed.

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