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How does the Coupon Calculator work

I am a professor of electronic commerce at University of Frankfurt and my primary motivation is to add scientific knowledge to all the discussions around websites such as Groupon. You as the advertising entrepreneur need to provide some details on your planned promotion. You might not know all values exactly, but you can easily use different values and compare the results. These comparisons might take some time, but just compare this time to all the problems that you face if the promotion is not profitable for you.

A special feature of the computational model is that cannibalization effects are taken into account. This cannibalization effects capture the loss that you experience if customers who would have come anyway now do so via the promotion and just pay a lower price. The increase in short-term profits will therefore consist of the profit from the difference of the promotion and cannibalized profits. The following chart depicts the computational model.


Please understand that I provide this computational model free of charge and assume no liability.