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This is very interesting. I think you had a small benefit because in skydiving there is a lot of things to upsell. Skydiving is such a huge, scary and adrenaline filled event in most people's lives that even the cheapest coupon hunter will have a desire to buy something to commemorate it and show it to his friends. BTW what is breakage? Is that when people get scared and refuse to jump?
First, you had it right in the sentence prior to this one. Your experience is enough of an outlier that it doesn't apply to most Groupon experiences. Second, isn't Groupon supposed to help businesses that are in trouble?
I've wondered whether the businesses that can fare better with Groupon tend to be those where labor is a greater part of their expense, and where the business owners -- especially for a small business -- can effectively trade their own labor at lower compensation -- as a hourly rate or absolutely -- in return for the increased business that Groupon generates (which then provides, they must hope, a longer term marketing payoff).
Also, where expenses are variable and there is not a large fixed overhead that must be met, regardless.
Once you introduce staff labor and physical products with hard margins as larger components in the equation, it seems to me that there's less buffer with which to adapt for a mis-calculation of the effects that a Groupon or similar experience will create.
And fixed expenses have to be covered, regardless, leaving thin margins perhaps insufficient.
As you mention, you also have significant additional revenue from add-ons. And your experience, inherently, probably generates a tremendous emotional boost that in turn helps to move those.
I appreciate your detailed description and explanation of how it has worked for you. It provides some good food for thought.
Thanks for this... really interesting. I just went skydiving for the first time last week and used a Groupon. It was fun but I wasn't immediately hooked and wanting to go again. I paid $109 for a 15k jump that is normally $209. I bought it about a year ago (Used it because Groupon was about to expire). The facility was so packed that I had to reserve my time far in advance. (They sold 4,500 groupons the day I bought)…
Depending on aircraft it generally costs around $12-20 per seat in the plane. The equipment costs around $15k to buy new is fairly expensive to maintain. Instructors earn anywhere from $25-85 per jump, depending on facility, the weight of the student and whether or not the student bought a handcam video. Also, it generally costs about $10 to pack the parachute after the jump. So you're looking at around $60-120 in cost for each tandem jump.
Outside video (a videographer) costs 1 seat and pays around $40-70 to the videographer. It pays more because they have to buy their own parachute and camera helmet ($2k-3k and $1k-2 respectively). They also have to pack for themselves. They also do less work, so it's harder to keep them around.
The aircraft generally cost around $1 million to purchase, give or take a couple hundred grand (Otters, Porters and PACs). Smaller, less efficient aircraft are available for $35-50k (Cessna 182 and 206s). To lease an aircraft costs about $600-1000 per hour for a large one (like an Otter), $150-200 for a smaller one (like a Cessna), both prices including gas. You can get a flight up in about .2-.3 hours for the larger planes, .4-.5 for the smaller ones.
The larger planes will get 12-24 people in them, the smaller ones 4-6.
Q: How to do make a small fortune skydiving? A: Start with a large one.
It seems like you worked out a lot of the positives and negatives that Groupon brings and strategized around them. How much of this planning was done from inside your business and how much was done/consulting on by Groupon reps? Was the 30% breakage specific to your business, or was that quoted by Groupon reps as an average? I'd have to think that a Groupon for something that requires specific scheduling and booking…
We modified pretty much everything about our business around running the Groupons.
Still, I feel that our rep did a good job helping us out, much more so than another form of marketing would. Would you expect a billboard company to come to my business and tell me how to run my business more efficiently, make sure I can handle it?
We ran a radio promotion around the same time and they did ZERO insofar as making sure we'd be ok. It also cost us a lot of money.
Restaurants and coffee shops have more to overcome when running a Groupon, but that's their job, right? Pick a good marketing strategy, be successful, make good decisions, etc.
> That said, I feel that all of the Groupon horror stories floating around are from businesses that would be in trouble regardless. First, you had it right in the sentence prior to this one. Your experience is enough of an outlier that it doesn't apply to most Groupon experiences. Second, isn't Groupon supposed to help businesses that are in trouble?
Thank you for writing this. Edit to add value: "Same-day" special + email list of people with confirmed willingness to pay money and get pushed out of a perfectly good airplane = a win. Presumably your costs are pretty much fixed after making the decision to do a jump, so you could hit that mailing list with a special promotion multiple times per year. It's a Tuesday, congratulations, have 20% off if we push you out…
I'm curious in the approximate breakdown of your expenses between other expenses and your own labor. Also, what portion of the former are fixed versus variable -- incurred "by the planeload", as it were. I've wondered whether the businesses that can fare better with Groupon tend to be those where labor is a greater part of their expense, and where the business owners -- especially for a small business -- can effectiv…