[cookiecaper]

I'm curious if Groupon has some minimum discount levels, because I frequently hear that people lost a lot of money on Groupon, and logically if you're going to lose a lot of money on a coupon you're offering, you won't offer it. Obviously some reduction in margin is necessary, but if it actually costs money to provide the service after the Groupon, that's a bit past the point of reasonability. The same rules that apply to traditional coupons should apply to Groupon because it's a similar target audience -- coupon clippers have never really been known to be "great customers".

Is there a reason so many businesses provide such deep discounts to Groupon? Are they just caught up in the hype, and Groupon can demand huge discounts because so many merchants want to use it?

[dagw]

If everybody else is offering a 70% discount and you're offering a 15% discount, chances are people aren't going to bother looking at your offer. Also since there is a certain amount of hassle and risk (if its a business you've never used and heard nothing about) in using Groupon from the customer side of things, I'm guessing most people won't bother if the discount is to small. Saving 15% just isn't worth it, especially if you're saving 15% at place you're not even sure you really want to go to.