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October 18, 2011

Deal-of-the-Day Sites Inflate Original Prices to Make Deals Seem Sweeter

By Tracey E. Schelmetic, TMCnet Contributor

There's a bit of a rumor out there that deal-of-the-day Web sites Groupon and Living Social do a little dishonest footwork to make the deals seem better: they inflate the original prices of the services they sell.

Thumbtack.com, a product and service “finder,” did a little test recently: they called 10 companies offering deals through both sites (five through Groupon, five through Living Social) and found that in eight out of 10 instances, the “original” prices displayed in offers exceeded the normal original prices, reported Business Insider.



Now a former sales rep from Living Social confirmed the findings with Business Insider. He said there are two circumstances under which prices are inflated: either the salespeople themselves do it to boost their quotas, or the merchants do it to make their offers seem more attractive (and the sales reps are under too much pressure to take the time to check the original prices).

For this reason, it doesn't seem like a systematic problem stemming from deep inside Groupon and Living Social, but rather something that's done right at the deal itself. Business Insider's source said that both companies are trying to combat price inflation and “doing their best to try and manage it.” One way they are doing this is by developing databases and other technology that will helps sales reps more easily check prices.

And buyers can always check the original prices themselves before they click the purchase button on the offer.




Tracey Schelmetic is a contributing editor for TMCnet. To read more of Tracey's articles, please visit her columnist page.

Edited by Jennifer Russell
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