Groupon still exists. That surprises a lot of people. At its peak in 2016, it generated over $3 billion in revenue and had more than 50 million active customers. Today it has around 15 million. The platform has shrunk significantly, but it still connects businesses with deal-seeking consumers, and the pitch to local service businesses hasn't changed much: no upfront costs, you only pay when a customer redeems, and you get exposure to a large audience.
The math, though, deserves a closer look before you sign up.
How the commission structure actually works
Groupon doesn't charge upfront fees. Instead, it takes a commission from each redemption, and it expects deals to be priced at a meaningful discount to attract buyers. In practice, that typically means offering your service at 40 to 50 percent off the regular price, then handing Groupon a commission on top of that.
When you stack a 50 percent discount with a commission that can reach 50 percent of the deal price, the math on what you actually receive per customer gets tight fast. A $100 service sold at $50 with a 50 percent commission leaves you $25 before you've covered the cost of delivering the service. For businesses where the cost of delivery is significant, that number can turn negative. The deal doesn't need to fail to lose money. It just needs to succeed.
The customer type problem
Groupon's core audience is deal-seekers. That's the product. Consumers come to the platform looking for discounts, which means the customers a Groupon campaign sends you are specifically filtered for price sensitivity. The businesses that benefit from Groupon are the ones where a one-time deal customer might convert to a regular customer, a restaurant where someone tries it once and comes back, a spa where a discounted first visit becomes a recurring booking.
For service businesses where the job is one-off by nature, a plumber, a roofer, an exterminator, the conversion math doesn't work the same way. You're not building a customer relationship with most of these people. You're delivering the discounted service once to someone who chose you specifically because they didn't want to pay full price, and the question of whether they call you again when they need you next time is an open one.
Redemption rates on Groupon deals typically run 60 to 80 percent. That means you need to be ready to deliver on most of the deals sold, and the volume can be unpredictable. Businesses that underestimated demand have found themselves overwhelmed with discounted work and unable to serve their regular, full-price customers well.
Where it still works
Being honest requires saying where the platform does make sense. Groupon works better for businesses with low marginal delivery costs, where the incremental cost of serving one more customer is small even at a discount. It works for businesses where the goal is genuine new customer acquisition and the service is the kind people repeat. It works as a slow-season traffic driver, not as a year-round pricing strategy.
And Groupon's current pitch is that commission rates are more flexible than the old fixed 50 percent model. That may be true, and it's worth verifying what the actual rate would be for your specific deal before agreeing to anything.
The question worth asking first
The businesses that run Groupon campaigns successfully tend to be the ones that knew exactly what they were buying before they launched. Not exposure, not new customers in the abstract, but specifically: discounted-service volume, at a known margin, from a price-sensitive customer type, with a calculated bet on what percentage would return at full price.
The ones who struggle are usually the ones who ran the math on exposure rather than on profit per deal. Groupon's customer base has declined significantly over the last decade. The exposure it offers is real but smaller than it once was. The commission math hasn't changed.
Before agreeing to any deal structure, calculate what you keep per customer after the discount and the commission, and decide whether that number makes sense even if none of those customers ever call you again at full price. If it does, it's worth a test. If it doesn't, the audience isn't large enough anymore to make the numbers work by volume.