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Thursday, January 19 2012

Groupon Tile & Grout Cleaning:

Recently one of my local competitors offered his tile & grout cleaning services through Groupon. If you are unfamiliar with Groupon let me give you a bit of background information. Groupon is an internet marketing company. They hook up with a local business and offer something they call "the deal of the day". You the consumer will purchase the deal of the day from Groupon and the profits of the deal are usually split 60/40. The business owner gets 60% of what you paid Groupon and Groupon gets 40%. In order to be considered for Groupon a business owner must offer a discount of at least 50% off their retail price.

Here was my competitor's deal: Save 83% Off Tile & Grout Cleaning. For only $48.00 this company will clean up to 165 square feet of tile & grout - according to the Groupon ad his normal rate would have been $277.00 for 165 square feet. This does not include the mileage fee mentioned on the ad. If you divide $277.00 into 165 square feet you will discover that his normal fee is $1.68 per square foot for tile & grout cleaning. This ad did NOT mention sealing, grout repair, restoration, etc. only cleaning. At those prices he would be the most expensive tile and grout cleaner in town. From the research I have done most companies in the Sacramento area charge from .75 to $1.25 per square foot for tile & grout cleaning. If he is required to give Groupon 40% of the $48.00 you spent this would mean that Groupon would receive approximately $19.00 and he would receive approximately $29.00 for cleaning 165 square feet of tile & grout. It is my understanding that his $29.00 will be spread out over three installments.

Let's assume that it costs him (3) gallons of gasoline to drive over to your place and of course (3) gallons to drive back. He also uses (2) gallons of gas while he is there doing the cleaning. Eight gallons of gas X $3.50 per gallon equals $28.00. Keep in mind that out of the $48.00 you spent on the Groupon he received $29.00. If we subtract $28.00 of gasoline from his Groupon payment of $29.00 this leaves him with $1.00 (that's right ONE DOLLAR). In this illustration we have not yet deducted for Cleaning Solutions, Cleaning Supplies, Insurance, Maintenance & Upkeep of Equipment, Payroll, etc.

I do believe Groupon has a right to operate in the market place but I do not believe that the cleaning industry is a good fit for the consumer or the cleaner. I learned a long time ago that you can ONLY offer your clients THREE THINGS: Price, Quality, & Service but you CAN NOT offer all three. You can successfully offer TWO but never all three and expect to stay in business. My fear with Groupon is that you can only offer one. If you have questions for me please contact me at

Michael Hull

Posted by: Michael Hull AT 01:35 pm   |  Permalink   |  4 Comments  |  Email
Great article. I enjoyed the way you break down for the average consumer. Many times we only look at price and nothing else. Will this guy be on time? Will he attempt to sell me more expensive services? What if I have more than 165 feet of tile am I obligated to pay him $1.68 per square foot for the rest of my floor? Thank you for your insights!
Posted by April on 01/21/2012 - 08:58 AM
Thank you for your comments. If this company is really charging $1.68 per square foot for tile & grout cleaning he would probably be the most EXPENSIVE person in the United States. This leads me to believe that he INFLATED his prices in order to make the Groupon Deal look better to the consumer.
Posted by Michael Hull on 01/21/2012 - 12:24 PM
One of the observations that I forgot to include was the fact that here in Sacramento County each time Groupon has run a carpet cleaning "Deal of the Day" or tile cleaning "Deal of the Day" it has always been with someone different. It could be said that Groupon is simply trying to "spread the wealth", but I believe the carpet cleaning business owner probably realizes what a money loser it was for him and he does not return. This is my opinion of course.
Posted by Michael Hull on 01/23/2012 - 08:30 AM
This man's groupon ad seems too good to be true. Save 83%? Are you kidding me? If he can reduce his prices by 83% then he was too high to begin with. Great article keep up the good work.
Posted by John on 01/31/2012 - 09:59 PM

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