Large Groupon Discounts Can Lead To Losses

There is a local bakery that sells custom cakes and cupcakes and all that. They are quite expensive..I think a dozen little "cake balls" is something like $25-$30. But damn if they are incredibly awsome. Way way better then grocery store or wal-mart bakery stuff. The cake is just the right amount of moisture. The frosting doesn't taste like plastic. I don't even like frosting, and I will eat this stuff without scooping a bunch off. I think the birthday cakes were get there are usually around $100.

Its a treat, its not something I buy every week.
 
eh, if you are used to grocery store shit there is no comparing it to bakery stuff.
 
Oldie said:
I think it's pretty clear these are not your run-of-the mill grocery store cupcakes. I would assume superior ingredients (not just sugar/flower..but fruits and what not) and significantly more craft in the icing than just throwing some on with a pastry bag.
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Yup, the frosting is made from infant squirrels which are notoriously difficult to catch and defur, yet alone whip enough to get a nice frothy red consistency.
 
westrock2000 said:
There is a local bakery that sells custom cakes and cupcakes and all that. They are quite expensive..I think a dozen little "cake balls" is something like $25-$30. But damn if they are incredibly awsome. Way way better then grocery store or wal-mart bakery stuff. The cake is just the right amount of moisture. The frosting doesn't taste like plastic. I don't even like frosting, and I will eat this stuff without scooping a bunch off. I think the birthday cakes were get there are usually around $100.

Its a treat, its not something I buy every week.
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None of these people will understand what you are saying because they are too idiotic to get that through their heads. They can't get around the whole different value of money in different countries. If they can't understand that, they will never understand that some places actually have a reason to have higher cost.
 
No wonder business was slow if she was charging $40.00 for a dozen cupcakes. I can get a dozen donuts at Tim Hortons for $5.50 and that is not even on sale.
 
Many clicks later, I got to the original story:

http://www.bbc.co.uk/news/uk-england-berkshire-15791507

"Need a Cake offered a deal of 12 cupcakes with a choice of flavours and designs for £6.50 ($10), which would normally cost £26 ($40). It received 8,500 requests as a result, substantially more than its usual production level of about 100 a month. The company, which employs eight people, had to bring in agency staff to try to meet the upsurge in demand. Ms Brown estimates the extra costs of staff and distribution could be up to £12,500 ($19230), wiping out profits for the year."

8500 dozen at $40 each would have sold for $340,000, but for $10 a dozen they sold for $85,000. They lost $20,000 by selling 8500 dozen for $85,000, so they must have cost $105,000 to make, or $1.03 per cupcake.

So, normal production is 100 dozen per month, which earns $4000 a month. With a cost of $1.03 per cupcake, that's $1,236 in costs per month, leaving $2764 a month in profits, or $33,168 per year, so the business did, as the original article says, "almost went bust".

Since each dozen costs $12.36 to make and distribute, they should never have done a $10 deal.
 
Gnasher said:
No wonder business was slow if she was charging $40.00 for a dozen cupcakes. I can get a dozen donuts at Tim Hortons for $5.50 and that is not even on sale.
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Posts like this are so stupid. Cupcakes might be overrated but the difference between a Tim Hortons cupcake and these are enormous.

It's like laughing at people for ordering a $30 16oz NY Strip Steak, since you can get 16oz of quarter pounders from Mcdonald's for $4. And then account for the fact that they're in completely different countries and the cost of food supplies (and just about everything else) is much higher outside of the US because their governments aren't subsidizing the cost like ours is.
 
So many clueless business experts in this thread. I have been saying this is a bad deal for the business ever since it started. Coupon clippers aren't gonna be new customers at full price.

I see service providers do this all the time. Yes let me work for less than I need to break even in hopes the customer will hire me at full price one day.
 
bacon said:
So many clueless business experts in this thread. I have been saying this is a bad deal for the business ever since it started. Coupon clippers aren't gonna be new customers at full price.

I see service providers do this all the time. Yes let me work for less than I need to break even in hopes the customer will hire me at full price one day.
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There's some instances where discounts do pay dividends. But cutting off your nose to spite your face isn't one of them.

I bought a few Groupon's, but they were small things to do with my kids on a lazy day. I took em to laser tag one day, and the local butterfly farm another. I have been to both things prior to Groupon, so I knew it was a good investment of time and money.

If you're cutting 50% off your price, and then Groupon gets 50% of that, you're basically asking to be ass fucked and paying someone to do it. Thats a harsh discount to take, I don't care what business you are in. The only time I would do that, is for friends in need, everyone else can pay up :)
 
Fault of the business, not groupon's. They know their margins, they shouldn't have offered a deal like that.
 
Old Man said:
Maybe. Still, it's a high markup.
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Not if they're Trendy-Urban-American style super cupcakes, those are four dollars and up a pop easily. Infact if these cupcakes are the ones I'm talking about and they are 40 bucks a dozen, and these are being sold in Britain, then this isn't a high price at all. Might even be a bargain to be frank.
 
For anyone who has traveled outside of the States, a pound or whatever the symbol is, is not the same as a USD. Compare apples to apples in currency and use the Big Mac currency converter. Or just go by a simple cup of Starbucks which seems to be the same cost comparative to minimum wage in the higher cost countries. The currency conversion is generally very wrong if you live and work in whatever country is being talked about.

This Groupon thing wouldn't sound as bad if put into proper context. I still think the advertising would have been worth it. I own my own business and can understand getting possible new customers eyes are always good.
 
evilsofa said:
.

Since each dozen costs $12.36 to make and distribute, they should never have done a $10 deal.
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If it costs them $12.36 to make and distribute a dozen cupcakes they shouldn't be in business in the first place. I mean shit I could make a dozen cupcakes for WAY less than that, and I'm not buying ingredients at wholesale prices, nor baking in large quantities to save on cooking costs. Yeah there is overhead associated with rent of their building but yeah, if that costs that much to make a cupcake they're doing something way wrong.
 
Ducman69 said:
Dumbass business owner for selling units below cost without a "first XXX orders, while quantities last" clause.

Stupid people regularly pay a stupid tax; this is nothing new.
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this: why would you sell below variable cost?
 
There are cupcakes that are worth $7 a pop. You can just discount something because the local grocery store bakery has them for a buck a pop. It's like saying Vieo card manufacturers are idots for pricing videocards at $200+.
 
sfsuphysics said:
If it costs them $12.36 to make and distribute a dozen cupcakes they shouldn't be in business in the first place. I mean shit I could make a dozen cupcakes for WAY less than that, and I'm not buying ingredients at wholesale prices, nor baking in large quantities to save on cooking costs. Yeah there is overhead associated with rent of their building but yeah, if that costs that much to make a cupcake they're doing something way wrong.
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1. This is not USD like you and the rest keep on thinking. Learn your currency. It is only £26. it will cost you $26 to get a cake anywhere that I know of at the min. 8 inch Icecream cake at DQ will cost you $25 do all of you guys go around bitching about the cost of those?

2. These are not going to be those small ones you make at home where you get 20 out of a box of cake mix, these are the ones where you get 3 out of a box of cake mix. How much would you spend making 4 boxes of cake?

The only issue here is what people have pointed out the owner was stupid for giving such a large discount and not having a limit. The actual cost is no worse that what sells here if you actually get your head out of your ass and understand currency differences and what you are buying.
 
sfsuphysics said:
But yeah these fucking "specialty" cupcakes companies are just another fad that will die out soon. Paying over $3 for a cupcake should be a criminal offense.
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I disagree. Anyone paying over $3 for a cupcake is either getting one hell of a cupcake or has money to waste on anything. To me it sounds just plain stupid but if someone wants to throw their money away like that I say let them.

If the cupcakes aren't worth spending $3 each on... and I'm sure they're not... the business isn't gonna get any business and they lose.

The prices sound pretty crazy but maybe they have "super" sales like this all the time going down to a somewhat reasonable price and make it look like a great sale and they decided to put it online.
 
sfsuphysics said:
If it costs them $12.36 to make and distribute a dozen cupcakes they shouldn't be in business in the first place. I mean shit I could make a dozen cupcakes for WAY less than that, and I'm not buying ingredients at wholesale prices, nor baking in large quantities to save on cooking costs. Yeah there is overhead associated with rent of their building but yeah, if that costs that much to make a cupcake they're doing something way wrong.
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As has been repeated many times in the thread already, these are not the cupcakes you are thinking of. They normally sell them for $40 a dozen. The groupon venture was an attempt to increase business by getting more people to try them. If they improved business by 50 or 100 dozen a month, it would have been worthwhile - had they thought to put a limit on the offer.

Exavior said:
This is not USD like you and the rest keep on thinking.
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In my calculations which he is quoting I did convert over to dollars because I can't think in pounds. $12.36 = £8.
 
evilsofa said:
In my calculations which he is quoting I did convert over to dollars because I can't think in pounds. $12.36 = £8.
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Thats fine as you understand that there isn't a $1 = £1 conversion, that said you have to understand that they have no idea what the rate is and don't pay anything according to that.

You understand that they are paying with £ not $. But only about 4 of us seem to understand that. Everyone else is hung up on the fact of the cost of stuff in USD. we are the ones over paying not them. Nobody can seem to understand that though. all you see if post after post after post going on about a $40 dozen cupcakes. Which isn't the cost of them, they are not paying in USD. they are paying £26. that doesn't matter how much value our money has lost it is still only £26 doesn't matter if the rate is $1.40 = £1 or $1.65 = £1. We pay $60 for a new game, they are only paying £40. All because our money is worth less than theirs and can't buy as much. My comment was meant for the people that don't understand that and keep talking about $40 as if that price actually has any meaning in this article.
 
Exavior said:
1. This is not USD like you and the rest keep on thinking. Learn your currency. It is only £26. it will cost you $26 to get a cake anywhere that I know of at the min. 8 inch Icecream cake at DQ will cost you $25 do all of you guys go around bitching about the cost of those?
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What are you talking about? £26 = $40, the dollar amount I mentioned (and you quoted) was from someone's calculation of how much it actually costs her in real money to make these, which is a lot of god damn money. And yeah I would bitch about a $25 mass produce cake that's a tiny 8", I bitch by not buying it regardless of how tasty it might sound.

2. These are not going to be those small ones you make at home where you get 20 out of a box of cake mix, these are the ones where you get 3 out of a box of cake mix. How much would you spend making 4 boxes of cake?
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You sure about that? Do you have inside knowledge of this particular bakery that we don't? Because I've had specialty cupcakes before, they are NOT large at all, and no way in hell you're getting 3 out of a premade cake mix. And yeah $4 a pop (someone else bought them), tasty? Sure, but $4 tasty? Eh... people spend their money on weird shit sometimes so whatever.
 
Basic math is hard for some small business owners sadly, if they had calculated even a 1$ profit this would have been a massive success story not failure
 
Ducman69 said:
"Worth" is definitely subjective, and I'd wager its only worth that to the yuppy starbucks guys punching away on their 64gb iPads. :p
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Yeah you can't even argue that they're works of art like the "specialty cake" fad (Buddy, et.al), since they're like 2 bite wonders.
 
Jaerb4 said:
Posts like this are so stupid. Cupcakes might be overrated but the difference between a Tim Hortons cupcake and these are enormous.
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The only thing stupid here is YOU thinking a "designer" cupcake is better than a donut. There are many types of donuts sold at TH and I am betting a Tim Horton's apple fritter tastes better than her cupcakes. Starbucks much? :rolleyes:
 
Gnasher said:
The only thing stupid here is YOU thinking a "designer" cupcake is better than a donut. There are many types of donuts sold at TH and I am betting a Tim Horton's apple fritter tastes better than her cupcakes. Starbucks much? :rolleyes:
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Your post is as hilarious as it is sad. Aside from the fact that you're still comparing TIm Horton's to a hand-made gourmet product, the fact that you think accusing someone of going to Starbucks constitutes an insult is ridiculous.

Have you ever baked anything without using Jiffy mix or some other pre-made mix? And made your own frosting instead of buying Betty Crocker?

OH GOD, DON'T INSULT MY APPLE FRITTERS
 
And they're in different fucking countries with different prices of goods. This thread is a perfect example of why fellow Americans are hopelessly isolated and refuse to think from any perspective besides their own.
 
Jaerb4 said:
Your post is as hilarious as it is sad. Aside from the fact that you're still comparing TIm Horton's to a hand-made gourmet product, the fact that you think accusing someone of going to Starbucks constitutes an insult is ridiculous.

Have you ever baked anything without using Jiffy mix or some other pre-made mix? And made your own frosting instead of buying Betty Crocker?

OH GOD, DON'T INSULT MY APPLE FRITTERS
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News flash: TH donuts are hand made just like those fucking overpriced cupcakes. You are delusional if you think a cupcake has more monetary value than a good quality doughnut. Maybe TH should precede all their donut names with the word "gourmet" then they can jack the price up to a false value too. Eh wot, skippy?
 
Jaerb4 said:
And they're in different fucking countries with different prices of goods. This thread is a perfect example of why fellow Americans are hopelessly isolated and refuse to think from any perspective besides their own.
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But here lies a major problem with the UK. They pay more and on average earn less than Americans. Last I was in the UK prices were disgusting and this is coming from an ex-pat Brit who has lived in London and not an American. Brits should be outraged at UK prices but you seem to be saying it is all good and ok.
 
Gnasher said:
News flash: TH donuts are hand made just like those fucking overpriced cupcakes. You are delusional if you think a cupcake has more monetary value than a good quality doughnut. Maybe TH should precede all their donut names with the word "gourmet" then they can jack the price up to a false value too. Eh wot, skippy?
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All you're doing is arguing your preference of donut over a cupcake. Someone could just as easily say they like Big Macs more than steak sandwiches, and go off on a tangent like you have. Then add in a retarded smiley face and make fun of people who pay more than $10 for their beef.

TH donuts are not hand-made like these are, nor are most cupcakes. Do you know what hand-made baking is like? No one is doing individual designs or frosting of TH donuts. Every ingredient they use is frozen, prepackaged and shipped to them.


Gnasher said:
But here lies a major problem with the UK. They pay more and on average earn less than Americans. Last I was in the UK prices were disgusting and this is coming from an ex-pat Brit who has lived in London and not an American. Brits should be outraged at UK prices but you seem to be saying it is all good and ok.
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First of all, London is an expensive city. I don't know where you live, but most metropolises are more expensive than rural areas. Higher property costs, less access to supplies, etc. Second, do you know why something like a cupcake is so cheap to produce in the US? Because the main two ingredients, flour and corn syrup, are driven down by the government with heavy wheat and corn subsidies.

British people get more social benefits like better education, cheaper universities and universal healthcare, but they have to pay more to eat out and for imports (since they don't exactly have a lot of agriculture land.) That still has nothing to do with what the going price for hand-made cupcakes would be in London. Comparing it to factory pre-made fast food like Tim Horton's is just insane, even if you don't think cupcakes taste very good.

They're using different types of ingredients, different types of designing and one requires far more attention to detail, and their supplies are all more expensive because of where they're located. On top of that, it's a small family business versus a large international chain, which is never an equal comparison due to economies of scale, cheaper credit, etc.

Gee, why go to an expensive local baker when the Walmart carries Entenmann's? hur hur hur
 
sfsuphysics said:
What are you talking about? £26 = $40, the dollar amount I mentioned (and you quoted) was from someone's calculation of how much it actually costs her in real money to make these, which is a lot of god damn money. And yeah I would bitch about a $25 mass produce cake that's a tiny 8", I bitch by not buying it regardless of how tasty it might sound.
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Real money? so what anything other than the USD is fake? Given how its value is dropping I would call it the fake one. Given that they are being made with stuff bought using GBP, employees are paid with GBP and they are purchased using GBP that is the only value you can look at and actually give a fair assessment of their cost. Fuck how much it is if you convert that to USD as our money sucks compared to theirs and that is different depending on the time of day. hell that £26 has probably went from $39 to $41 in USD today depending on when you were converting it. not their fault that we need $1.60 to buy what they can for £1. All they know is that an item that cost £2 cost that much all day long.

Lets change the context and look at it from how much it would be in Yemen Riyal (YER). It is 8541.27659575 in that currency. why would anyone pay over 8500 for cupcakes that is just crazy. that is a waste of money right there, 8500 for cupcakes.

But I think we should look at it from gold. it is only 0.00092 ounces of gold. That isn't very much gold. So why is everyone complaining about having to spend 92/100000 of an ounce of gold on something. That is barely even a speck. .092%
 
I feel sorry for some people posting that have never had a good cupcake.

comparing good specialty bakery cupcakes to grocery store ones or donuts is like somebody who doesn't know any better wondering why people would pay $500 for a video card when a $150 card will run the same games.

It's $3.34 per cupcake at normal price which isn't bad. we all spend on something as a treat, from candy to energy drinks.
 
I live not far from this bakery, and they sound very expensive for ordinary cakes. These look like special cakes you might order for a special occasion.

Even then I think they are still expensive, but I normally buy dimms and cpus and atx psus so who knows.

The bakery is not in London its in Reading Berkshire, by American distances its not far I suppose.

not as expensive as London but nowhere is cheap in the UK. Big local property TAX.

Strict costly employment laws.

High all other TAXs and High cost of transport etc, make everything expensive.

After the cost of production you might make a small profit.
 
Jaerb4 said:
All you're doing is arguing your preference of donut over a cupcake. Someone could just as easily say they like Big Macs more than steak sandwiches, and go off on a tangent like you have. Then add in a retarded smiley face and make fun of people who pay more than $10 for their beef.

produce in the US? Because the main two ingredients, flour and corn syrup, are driven down by the government with heavy wheat and corn subsidies.
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No, your analogy is completely flawed, I am comparing a T-Bone steak to a New York steak and their real value. I'll make it simple for you. Anyone who pays $40.00 for one dozen cupcakes needs to have their head examined, even in the UK. "Designer" cupcakes my ass.
 
Well those must have been cupcakes made out of Filet Mignon because $40 is a lot for cupcakes and even $10 is.
 
Gnasher said:
No, your analogy is completely flawed, I am comparing a T-Bone steak to a New York steak and their real value. I'll make it simple for you. Anyone who pays $40.00 for one dozen cupcakes needs to have their head examined, even in the UK. "Designer" cupcakes my ass.
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Did you even read past the part you quoted? Ignore the damn analogy and consider what he actually said. He very thoroughly explained why those cupcakes are "$40." Prices are especially high simply because the bakery is located in London. No consumer needs their head examined if they want to pay a premium for primo foods. Food prices need to account for cost and revenue. There are cuisines and foods that carry a price which reflects the quality and availability of the ingredients, the time invested into the final product, and so on. There shouldn't be any debate here.

The woman fell victim to her naïveté and didn't responsibly use the Groupon service.

The quality of discussion in these news threads ...... :confused: --> :eek: --> :mad:
 
To me this is all a bunch of whining from an idiot who does not know how to run a business. As other stated put a cap on anything if you do not want it to get out of control. You could of also found other ways to keep costs down rather than hiring and agency which did make money on the deal. And even if everything was unavoidable and true. You still have the fact that you exposed your business to 8500 customers. And while that might have been a near term loss if you delivered a good product many of them will be back and you might just make that money back.

Also just personally a T-Bone steak aint worth $40 either. Most food that you pay a high price for simply isnt worth it. But I guess to some people it is because those places will keep selling as long as someone is buying. Some people just like to brag about how much they can spend on something and for them plenty of shops and business will gladly sell them something for 2 - 4 x a reasonable price.
 
Ducman69 said:
Dumbass business owner for selling units below cost without a "first XXX orders, while quantities last" clause.

Stupid people regularly pay a stupid tax; this is nothing new.
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+1 When we were the exclusive provider of LOTR The Two Towers for half.com pre-orders, I made sure everything as accounted for, including extra man-power (if necessary) and made sure to have a reduction of overall costs/item with increased numbers. Fail @ business is fail.
 
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