More in regards to groups that deal with rentals and try to put as little into them as possible. I’ve done more dickering with them trying to get a fair price and dealing with late payments.
Some of the best jobs we have done profit wise has been from dealing with rental property management. Granted, they are working within a budget to get maintenance work done but the upside can be volume. They also can take up to sixty days to pay, but we know that moving forward.
I would say dealing with property management easily beats this groupon deal you talk of. That’s just me though, it may work good for you if finding new jobs isn’t something you do well.
A local power washing company is featured in today’s groupon. The offer is $75 for a low pressure house wash up to 2500 sq. ft. They have already maxed out the offer by selling 200 house washes today.
House washes around her go for about $.08 per square foot. So, if the average home is 2,000 sq. ft., then they’ve just sold $32,000 worth of house washes for $7,500 [their cut after groupon takes half the discounted price
($75/2 = $37.50 x 200 = $7,500)]. That’s $37.50 per house wash and $0.01875 per sq. ft.
I can’t imagine doing a 2000 sq. ft. house for under $40.00. If it takes them 3 man-hours for every house, it will take them 600 man-hours to do 200 houses. They’ll bring in $12.50 per man-hour. Those of you who have at least one employee know quickly that THIS IS A LOSS OF REVENUE. If this doesn’t run them out of business, then I’m sure they’ll never do it again.
The biggest problem with this is they are destroying the market locally. Now 200 people will probably get a decent house wash (most people don’t really check the work) and then they’ll be spoiled by the price such that they will wait until another company offers another screaming groupon deal instead of paying the going rate for house washes.
Rob, is there a link to see this deal? That’s just insane. We use around $15.00 to $20.00 in cleaning solution to do a 2500sq ft home on average. $37.50? You may have read that wrong.
I don’t understand this conversation why in hell would any of you consider group on they are an insult to our line of business. First they advise you to lower your normal pricing by 50% such as pressure washing $125 an hour to $75 then afterwards they take their 50% share of that. Who in their right mind wants those type of customers, like I’m going to sell blind cleaning $15 each or roof cleaning $600 upwards to those tight wads.
As for making $10 an hour using this to build up window cleaning customers, speaking as a Brit get some bloody balls and charge $9 a window or whatever you want to make per hour instead of selling to tight a%^ homeowners. Jesus, when I’m doing a job $10 wouldn’t EVEN cover me cleaning their damn mirror. In fact, I wouldn’t clean 2 or 3 windows and a door for less than $90 never mind group on crap.
FYI I started out like everyone else too building up customers over here but built my residential income base on quality and service and above all what value on my on myself and god damn I worth it. Anyone on here offering their service for 1/4 of their normal price needs their head looked at personally. My advice would be get some good shoes and put some pride in yourself and do like most of us do on here and offer your service at a price you can afford to pay your bills on. Jesus $10 or $37 for pressure washing! I wouldn’t even turn the water on or pee on them if they were on fire for that.
I offer a lot of services with window cleaning being my favorite one and when customers bark at what I charge I simply tell them they are welcome to call for another estimates along with the usual things to be aware of stuff and towards the end… if they are insistent on the price I inform them that I work VERY HARD actually not to be the cheapest for a reason.
Maybe peeing on them is the $37 soft wash?:o
+1 on explaining why we aren’t the cheapest, which brings up the next question.
Somebody said they wanted to see his price structure, so are they also looking for proof of Business License, Liability Insurance, Workers Comp, and actually require written proof, or is Groupon willing to turn any knucklehead loose on their customers?
Again there is nothing good about this Groupon. Only one benifiting is Groupon. Horrible for all industry’s they touch…
Here’s the offer - ARC Powerwashing Raleigh Deal of the Day | Groupon Raleigh / Durham
Rob, Thanks for providing the link. That’s just crazy. $150.00 value for the original price is low as far as I can see. 0.015 cents a sq ft. We package it up and sell around .40 cents a sq ft. Power wash, gutter whitening and glass.
So, you’re at $.40 for a housewash? At $150 for a 2500 sq. ft house, they’re at $.06 regularly priced. Most of us do $.08/sq. ft. for housewashes around here.
Rob, Markets will bear what they will. In hindsight, I should not have compared pricing from one area to another. $37.50 for a house wash just seems totally crazy to me.
Man o man, I wished I had never done groupon! I canceled the deal!..I got a call from a lady today wanting me to do 150 for 60 like the groupon, she didn’t purchase the one, but wanted the deal?! what the heck was she thinking…I just hope I didn’t hurt my image too much.
When looking at this I would look at the Life Time Value of the client. If you were even at a break even point or even at a loss it would still work out if you had a good system in place to not only keep them as clients but I believe the real money will be in the referrals with a good referral system in place . You’re paying for clients one way or another. But who ever before has ran a campaign and gotten paid before you did any of the work. Again I think with the right systems in place for 1. upsells 2. turning into a regular 3. Most valuable referrals.
So lets see if my math would work. $100 of work = 2 hours of work, avg. $50/man hour. Groupon deal $50. Your cut $25.00
200 deals sold= $5000
1/3 to you= $1665
Lets say you upsold 10% of them just $100 of additional window cleaning/gutter cleaning/chandelier cleaning etc.(I guarantee you would do more than this if you ran through a simple script)
And 20% referred you to 1 job of an avg. of $200
For this we’ll only use first year and not year 2 or 3 or 4 or 5 or 6.
20 upsells x 100 = $2000/ 50hr= 40 hrs
40 referrals x 200= $8000/50hr=160 hrs
Groupon $5000 400 hrs
Total revenue = $15,000/ 600 hrs= 25/hr at least a breakeven to acquire new customers and turn them into clients. I think I would do it for new customers only. I did low estimates of hourly pay(I see many people topping $100/man hr) Low estimates on the referrals that you would generate with referral systems that work in place. And a monkey could upsell more than 10% of the jobs. I see it as a risk free way to grow with the proper systems in place and with the mindset of creating long term value for your clients and not making a quick buck off of 1 cleaning.
Almost forgot every referral that you got from the referral wasn’t added in and just think if you’re taking care of your clients like you know you should be just think about year 2, 3, 4, 5, 6 and all the referrals that kick off of that, plus all the additional services that you well.
I’m curious to what you think?
I think you should post here a lot more Don, you add tremendous value to the group. Great post.
Are Groupon customers typically the type who are just continually seeking a low-cost deal? Folks don’t care for severe price increases at future services…
Is time and money better spent finding one’s demographic Life Time Value customer?
Don’t we hate providing service at a fraction of our hourly goal rate? Is it sustainable even at the shot-term for those with employees?
Groupon still sounds like a desperate attempt to just stay busy – not profit – to me.
How has it worked for you thus far, Don?
In your example you are looking at doing $30,000 dollars worth of work for $15,000. This includes the upsells and referrals. In my case, I pay my crews a total of 40% of the jobs they do since they use their own vehicles. 40% of $30,000 equals $12,000 for gross pay for employees. Add to that the company’s share of federal and state taxes, and insurance premium increases due to the increased company revenue and the company is not making any profit. Even at the more usual 30% commission rate, there is very little, if any, profit for the company.
Growing in terms of gross sales, without growth in the amount of profit you or your company make is not real growth.
How many of these Groupon customers will rebook with you at your full price the next time they want their windows cleaned? Not many, I suspect.
I have been trying to come up with an offer that would get my company the exposure that Groupon would give it, and still make it profitable for the company, but I have not had any success yet.
Chris, you said in your earlier Groupon post, that you were going to take the hit on your first offer so that you could then list other offers with them at a lower cost. Did you ever do it? If you did, what has been your experience to date with it?
Thanks Chris, I just love the concept of Life Time Value of a client. In my opinion so many miss the point that all the money is on the backend, after turning customers into champion clients. So focused on the short term game(making big bucks today) and not think about how valuable a great client is for the longterm of your biz.
I agree with you that focusing on the demographic that is going to be paying you for years to come is the best to zero in on. I just believe that there hasn’t been anything else like this to have an infusion of 200 customers into a biz in one day. It’s crazy fascinating to me.
I also agree that it does suck not making what you should make per hour. But I bet you would agree with me that it sucks even worse to run a 1000-2000 ad and not have it work. With the Groupon almost 0 risk. Yes you will run into scum bags who want more than and are only looking for a deal. But I believe that if you provide great service, are honest and have the systems in place from the first quote it would work pretty slick.
Is it sustainable? You’re paying for your customers/clients one way or another. Again spending time, energy or money.
Desperate attempt is a far fetch. I think someone who’s thinking longterm and knows how to convert customers into clients, get referrals and ethically upsell is going to excel at this.
Here’s what I do know. If I run any other advertising/marketing campaign I have to either spend time, money or energy. To my knowledge there isn’t one other campaign that you can run where they say here’s some of your money in advance. Usually it’s you can wait 30-90 days to pay us. Not, here’s a check for $1665 before you do any services.
How well has it worked for me? I haven’t done groupon because they aren’t in my area. But I have done a lot of giveways to charities, trades to radio station and have successfully gotten referrals and repeat work. Am I bummed that i can’t get paid full price every time, yes. But I do know that each one comes into my funnel has a certain dollar amount if I played my cards right.
I’m curious, do you currently have an acquisition cost for your clients?
You’re either spending time, energy or money.
I agree with you that if you believe that it won’t work, it won’t work as Henry Ford said “If you think you can do a thing or think you can’t do a thing, you’re right.”
Not real growth? I’m confused, what do you consider growth? Also if you don’t have any systems in place that creates them to turn into clients, add more services or create referrals this will be a plan for failure.
Don’t believe me. But I am 100% certain that all of the profits of a biz come off of the backend. A fool only thinks of the front end.