Last week I posted an article showing that many daily deals for local services (like house cleaning, handyman services, and interior painting) are priced equal to or higher than the average local price of the service. My article was based on a study done by Thumbtack, a professional service directory. Thumbtack has a direct interest in daily deals involving the service industry as it can or may affect some of the professionals listed on their site.
Thumbtack decided to do a follow up when “something in that study really caught our attention: the regular prices quoted by Groupon and LivingSocial seemed strikingly high. We made some phone calls last week to merchants who had run deals on Groupon or LivingSocial, and it turns out our instincts seem to have been right.”
In 8 of the 10 deals they reviewed, the “regular” prices quoted by Groupon and LivingSocial were higher than the prices quoted by the same merchants when they contacted them.
Of five Groupon merchants that were called, all quoted prices lower than the merchant’s regular price advertised by Groupon.
Of five LivingSocial merchants that were called, three quoted prices lower than the merchant’s regular price advertised by LivingSocial.
The study parameters:
For each deal reviewed, the merchant was contacted and asked for their regular price on the same service offered by the daily deal. For example, if a house cleaning deal was limited to two hours of routine cleaning in a well-taken-care-of home in zip code 98765, then that’s exactly the bid asked for. Not once was a discount or deal asked for. All calls made were reported, no exclusions – hence removing any possibility for bias.
In my opinion – Shame on the merchants, not Groupon or LivingSocial. In all fairness to the daily dealing sales agents, unless they are extremely knowledgeable in the service industry, he or she will be taking the merchants word for pricing. Let’s take a look at the dynamics of the entire equation.
Sure, you can point a finger at the daily dealers: well, they should have done more research, or they should know about the pricing. In my opinion, that’s a cop-out. If I am an agent, my main concern is the legitimacy of the business and the standings that provider has (work wise) in the community. Service industry pricing is ambiguous as I pointed out in a recent article. That being said, merchants that state higher prices to daily dealers are doing more damage to themselves and their own reputations than those of the daily dealers.
A few final points:
Thumbtack provides an excellent service and has certainly come up with some good studies. Feel free to check them out at thumbtack.com. As for our daily dealers, cut them some slack on this issue. In my opinion the merchants need to rethink their deal pricing or face the possibility of damaging their own names and business reputation.
Why can you go online right now and buy any product you want but you can’t do the same for tutors, handymen, dog walkers, or other local services? Thumbtack is changing that.
Thumbtack isn’t like typical local search directories that simply return business listings with ratings and reviews, leaving you no better off than the paper Yellow Pages.
Instead, Thumbtack gives you the ability to vet, contact and book service professionals the moment you find them.