Coupon companies promote discounts from participating businesses directly to consumers, providing a valuable service for both groups. Businesses profit from working with coupon companies by boosting traffic in their stores and encouraging first-time visits. Consumers benefit from direct cost savings for goods and services in the market. However, coupon companies themselves have to make money to survive and grow. Some make money through direct sales, while others look to alternative sources to generate income from free giveaways.
Online coupon distributors can leverage ad-placement services to sell advertising space on their websites. Online pay-per-click ad-placement services pay a certain amount to website hosts each time an ad is viewed, and even more when it is clicked. This business model can allow a coupon company to give away coupons for free, relying on sheer traffic volume to drive advertising income. This income strategy can be combined with others to create a more robust and complete coupon business model.
Some coupon companies sell the deals they provide, charging less for coupons than what they are worth to customers. A company may sell $20 coupons for $10, for example, having already paid $5 to the business providing the deal. For these companies, coupons act as regular inventory, allowing them to employ a traditional retail business model. Success relies on consistently driving new traffic to participating businesses to secure repeat coupons from deal providers, since that is a key to reliably replacing inventory.
Especially widespread or popular coupon distributors can charge the businesses included in their program a fee for marketing their product. This works if the coupon company can credibly argue it would boost the business's sales high enough to compensate for both the discounts they offer and the fees they pay to be part of the coupon program. This model can include commissions on sales paid by the deal providers after coupons have been redeemed as well.
In addition to selling deals on an individual basis, coupon companies can sell coupons in bulk directly to consumers. Some companies sell physical coupon books, for example, charging a fraction of the total savings contained in the book but still bringing in enough money to cover printing fees and sales expenses. Convincing as many businesses as possible to provide coupons for the bulk product is essential to making this business model work.
Web-based coupon companies can make money through affiliate programs and relationships with other deal distributors. In an affiliate relationship, a large online retailer or coupon company pays another website to lead traffic to its own deals. Smaller coupon companies can list the deals of larger coupon distributors, sending their own traffic on to the larger company and receiving a commission on any resulting income.