Cupcakes are flour, water and sugar ........ no one is ever going to convince me that somehow you are losing a bundle when selling them at over 50pence a go.

Plus rent, insurance, gas/electricity, staff wages, equipment factored over time, advertising...

Furthermore, although the materials cost is pretty much the same per unit, the fixed costs per unit will be greater the fewer units sold. This means that in a small or new business with low volume turnover, the products will be more expensive.

I don't buy cupcakes except at charity bakesales but £2.50 per item from a small-scale upmarket baker doesn't seem completely unreasonable when all the costs are take into account.

Your maths seems to be wrong. She received £2.20 per dozen cupcakes, so that's around 18p per item. If (as she claims) she lost £3 per dozen, that means each cupcake cost at least 43p to make. Would you be happy to sell a dozen cupcakes for £2.20 if they cost you £5 to make?

Where is your proof she got £2.20 per dozen cupcakes, or are we just bandiing about random figures put on here.

Fact is she sold them for £6.50 ......... so can we have definitive proof of where she has lost the additional £4.30???

Cup cake cases, fancy decorations, boxes, stamps. Definitely not free.

this post is all kinds of wrong!!

you missed out the expensive ingredients butter and eggs. Flour water and sugar would just make paste!

The kind of cupcakes we are talking about here usually have elaborate decoration and or added luxury ingredients and expensive packaging (premium cases and custom boxes) They should be as much a treat for the eyes as the lips. I assume you are just thinking about the bog standard cakes that you get mass produced in a supermarket.

Even with access to serious industrial catering equipment for mixing and baking in large batches they still need to be finished by hand which is very labour intensive.

if the deal cost £6.50 then groupon takes half at least (in the US i think if the deal is less than 10 dollars groupon keep the whole amount!!) so she would be receiving maximum £3.25 or 27p each. The 22.5p figure takes into account VAT. These are not random figures, this thread is about how groupon works which you have entirely missed the point of by stating that she receives £6.50

Your 50p figure is wrongly assuming she keeps the whole £6.50 which is incorrect.

Ouch! thats me told!

I'm using the information contained in articles linked earlier in the thread. It's widely reported that of the price a business agrees with Groupon, the business receives 50%, which would be £3.25 in this case. It's also been stated that the VAT liability for the transaction is passed in full by Groupon to the business, so that would further reduce the net revenue by the appropriate VAT rate in force at the time.

I realise that doesn't prove she only got £2.20 but it's very likely that's how much she would receive.

Using a voucher businesses is another way of advertising, flushing out new business or hoping the customer will spend more than the face value of the voucher. It would be impossible to benefit a business in any way if anyone signed or agreed to something that did not make (good enough) business sense for their individual concern. If the cup cake owner had forgotten to calculate the effect of the agreed 75% discount on her breakeven level of output and cap the vouchers she made a mistake but for all that it‘s created some free publicity for her.

She capped at 1,000 over 6 months but Groupon sold 9,000 and didn't work with the timeplan agreed. Presumably she had calculated that she could afford 75% on the 1,000 (over 6 months) that she agreed with Groupon. It wasn't her fault that Groupon oversold but once they had done so then it was difficult for her to refuse to honour the vouchers because then customers would have blamed her rather than Groupon.

Groupon are not in the market place to be evil or purposefully attempt to bring down businesses to secure financial gain for themselves. If the cupcake owner hadn’t allowed her offer to be so hugely discounted the take up rate may have been of more sensible proportions. It’s difficult to get a clear picture of what happened nor do I understand why the cupcake owner wasn‘t on the phone to Groupon complaining that she wanted the offer cut off the moment the vouchers sold topped 1,000. What she does say is ‘We only expected to get a few hundred orders out of it but we had thousands and thousands pouring in. We had to cut it off at 8,500 orders.’

http://www.dailymail.co.uk/femail/ar...s-profits.html

I don't know the absolute truth of this story and have never tried to sell through Groupon so I don't know what feedback retailers get about the progress of their offer. It may be the the retailer has no way of knowing how many have been sold in which case Groupon needs to track the sales. Alternatively, Groupon may allow retailers to track sale numbers in which case it would be their responsibility to do that.

However, if a retailer agrees to sell X number of vouchers though a discounter then only X number should be sold - no more. Internet sales can happen extremely quickly so it is possible that several thousand sales happen within 24 hours especially as good deals get additional publicity through Twitter and forums such as Money Saving Expert. By the time the retailer realises that the offer has been oversold then it may be too late.

In this case, I don't know where the fault really lies and maybe it is on both sides. However, there certainly have been problems with Groupon and both retailers and customers should be cautious.

http://www.guardian.co.uk/technology...rate-deals-oft
http://www.theregister.co.uk/2012/03...ing_practices/
http://tomuse.com/daily-deal-sites-g...s-advertising/