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Merchant Profitability for Groupon Stores (Promoted)

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By Yipit.com

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DriversGross Profit / Voucher

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Deal AssumptionsExisting Customers

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Deal Value$50Revenue from Groupon$8.4

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Deal Discount50%Revenue from Overage3.4

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Deal Price$25Revenue from Existing Customers11.8

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Overage %14%Less: COGS11.4

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Commission %30%Less: Cannibalized Revenue4.9

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Cost of Goods Sold %40%GP from Existing Customers($4.4)

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Credit Card Fee %2.5%

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GP from Breakage$0.0

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Buyer Mix Assumptions

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Unredeemed (Breakage) %0%New Customers

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Current Customer %50%Revenue from Groupon$8.4

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New Customer %50%Revenue from Overage3.4

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Revenue from New Customers11.8

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Repeat Visitor AssumptionsLess: COGS11.4

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Conversion to Repeat %19%GP from New Customers$0.5

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Repeat Visits3

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Vouchers per Customer1.5Follow On Visits

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Current Customers Already Going30%Revenue from Repeat Customers$10.8

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Less: COGS4.3

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GP from Follow On Visits$6.5

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Merchant Profit / Voucher$2.5

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Notes

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1. Conversion to Repeat % is a function of non-existing customers who redeemed voucher, i.e., net of Breakage, Existing Customers, and quotient of vouchers per customer

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2. Other inputs based on a survey of Yipit's survey 100 small businesses, and industry research.