Get paid instantly: Introducing Book It Now and Instant Invoice

by Thumbtack | January 18, 2012 at 12:14 pm

Today Thumbtack is introducing credit card payment support and invoicing services between buyers and sellers.

These two new features – frequently requested by our buyers and sellers – are big steps towards Thumbtack’s mission to change the way we buy services.

We want to make it as easy to hire a house cleaner or wedding photographer as it is to buy a book on Amazon or a used iPod on eBay.

Credit card payments and invoicing are huge steps towards this vision. Thumbtack is now bringing $40 million of new work to local businesses annually – these new features will make this work simpler to fulfill than ever before.

Book It Now: Lock in pricing and guarantee payment in advance

The Book It Now tool allows a merchant to offer a price quote that a consumer can book immediately with a credit card.

Here’s why this is a helpful tool:

  • If you’re buying services, you can compare transparently-priced job quotes, lock in the job’s price up front, and pay online.
  • If you’re selling services, you guarantee your job’s payment in advance so you don’t have to worry about when or whether you’ll get paid.

For example, say a bride is looking to hire a wedding photographer. When the photographer responds to the bride’s job request, the photographer can enter a price quote and enable Book It Now with one click. The bride can choose to accept the Book It Now price and enter her credit card information to lock in the price.

The advantage to the bride? She can compare transparently-priced job quotes, lock in the job’s price up front, and pay securely with her credit card online.

The advantage to the wedding photographer? This is a low-stress booking. The money will be deposited in his bank account, deposited in his Paypal account, or mailed to him by check within a few days after he tells us that the job is complete. No invoicing. No write-offs for non-paying clients. No waiting for his hard-earned cash.

Using the Book It Now feature is not required when submitting a quote on Thumbtack. However, consumers have told us that they’d prefer to book and pay up front – so when Book It Now is used, everyone wins.

We know that it will not be possible to enable the Book It Now feature for all price quotes submitted through Thumbtack. For example, a job might be charged by the hour, but the job’s total hours aren’t available until the job is complete.

That’s why we built Instant Invoice – to quickly and securely collect payments after a job has been completed.

Instant Invoice: Get paid by credit card after the job is done

The Instant Invoice tool allows all consumers to pay for any job on Thumbtack with credit card.

We know that paying – or getting paid – for a job can be a real hassle.

If you’re a small business, maybe you don’t yet accept credit cards but would like to do so. Or maybe you’re worried that one of your customer’s checks will bounce. Or maybe it’s just a pain to spend time creating and mailing invoices to your clients.

And if you’re a consumer, maybe you’d like to pay your house cleaner with a credit card rather than with cash. Getting cash from an ATM, remembering to pay an invoice, or writing and mailing a check take time. Currently very few local service professionals accept anything other than cash or check – wouldn’t it be nice if you could pay for any local service by credit card?

Now you can, with Instant Invoice.

Instant Invoice is an easy-to-use, professional-looking invoice builder. Merchants can use Instant Invoice to quickly compose and send a bill to the client for any job completed through Thumbtack. The Instant Invoice will be sent to the client by email, and the client will simply enter his credit card information to pay. The client’s payment is transmitted to the merchant’s bank or PayPal account (or to a mailbox by check) immediately after the client submits his or her credit card information.

The benefit to the consumer? A fast, easy way to pay by credit card.

The benefit to the merchant? No more printing invoices and mailing them. No more dealing with cash or checks.

The fine print

Using these features is currently free. However, we will one day charge a transaction fee for using these features.

Payments made through Thumbtack are powered by PoundPay.

Thumbtack has chosen PoundPay – a company that specializes in secure payment systems – to power payments for its service professionals. PoundPay has built a system to quickly and safely transfer money from the credit cards of consumers to the bank accounts of local service professionals.

After receiving their first payment, merchants will be prompted to open their PoundPay accounts and enter their preferred payout method: direct deposit, check, or PayPal. Once they set up their PoundPay accounts, money earned on any future job will be automatically delivered via the preferred payout method.

These features have been a long-time coming – we hope you use and enjoy!

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Thumbtack raises $4.5MM Series A financing

by Thumbtack | January 9, 2012 at 9:03 am

Today we’re thrilled to announce some great news for our community of small businesses and consumers nationwide: Thumbtack has raised a $4.5 million Series A financing. We’ll now be able to significantly accelerate our growth, simplifying more lives and connecting many more people with great local professionals.

Founded in 2009, Thumbtack is a community marketplace for you to list, discover and book local services. We make hiring a service professional as easy as it is to buy a book on Amazon.com.

This investment round was led by Javelin Venture Partners, with the additional participation of MHS Capital and Tim Draper. We are very excited to bring these great partners on board, and are already benefiting from their contributions.

Javelin’s Managing Director, Jed Katz, has joined our Board. Katz is excited about the company – particularly about how big the opportunity is to transform the way people find and hire service professionals.

Thumbtack has seen dramatic growth over the last year. A few stats about us:

  • On average, a new user has signed up on Thumbtack every minute of every day for the last six months.
  • There are about half as many registered merchants on Thumbtack as there are claimed listings on Yelp (according to Yelp’s S-1, they have 529,000 – there are 240,000 on Thumbtack).
  • Thumbtack is already bringing $40 million of new work to local businesses annually, and the number is expanding rapidly.
  • Thumbtack currently has a team of eight in San Francisco – we will be scaling our team rapidly, and we are hiring designers and developers. If you want to join an awesome team with a great culture that is on a path towards big success, check out the info below.

A consumer anywhere in the U.S. can post a free request for service on Thumbtack, and we’ll bring them 3-5 bids on the job from qualified professionals to their email inbox within 24 hours. All kinds of local service professionals – like carpenters, wedding photographers, and Hindi tutors – are ready to respond to your request on our site.

The jobs on Thumbtack range from the small to the huge. A makeup artist from our site was hired to transform a few runners in San Francisco’s Bay to Breakers race into the blue Na’vi people from Avatar. And last month, Thumbtack received its largest job request ever – for the full construction of a six-story apartment building in Manhattan.

Thumbtack has built this community in only two years, and we’re extremely excited to hit the gas now that we have more resources.

The first thing we’re doing with this money? Hiring!

We’ve built a solid foundation to create an enormous and amazing company – but we still have a long way to go, and the opportunities to harness your creativity and develop a beautiful product here remain almost limitless. We’re currently hiring UX/UI designers, software engineers, and marketing rockstars. For the technical-minded among you, check out our engineering blog.

You’ll love coming to work at our office in San Francisco, working with our amazing team in the Philippines, and receiving emails from small businesses every day thanking us for bringing them work that allows them to pay their bills and put gas in their cars.

We have a lot planned for early 2012. We can’t wait to show you the new places our funding will take us!

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Santa’s business: An in-depth look at the thriving Santa industry

by Katherine | December 19, 2011 at 5:55 pm

We’re over midway through December, and the holiday season is in full swing. There are sparkling lights all over town, everyone is happily sipping on gingerbread lattes, and it seems like every weekend is suddenly filled with ugly sweater parties.

We know that the holidays have officially arrived when requests for Santa Claus appearances start pouring into Thumbtack. This year is no exception, as more and more people have been requesting visits from St. Nick for everything from family parties to corporate events. All of this holiday spirit prompted us to ask a question: who are these men behind the fluffy white beards?

In the interest of dispelling some of the mystery surrounding these merry Kris Kringles, we spoke to a handful of Santas across the country, from New York to Chicago to San Francisco. Our first item of interest was simple. How did they find their way into the Santa industry in the first place?

Santa’s career path

As it turns out, Santas have a variety of off-season jobs, and many seem to fall into their Father Christmas careers by chance.

We spoke to John Fariss, a minister in Maryland, who first donned a red suit fifteen years ago when he stepped in to fill St. Nick’s boots at his church, when their scheduled Santa canceled his visit at the last minute. Since then, he has joined Santa America and Santas for Christ, two charitable organizations through which he visits critically ill children throughout the year.

Dale Kilpatrick, a Santa in Texas, first started practicing his “ho-ho-hos” back in the ‘70s, when he spontaneously decided to spice things up in his day job as a school bus driver by dressing up as Santa to entertain the kids. Thirty-five years later, he now provides Santa visits to about 2,000 children a year.

We also spoke to Dana Friedman, a Santa in Manhattan, a lawyer with offices located near the former World Trade Center buildings, who started volunteering as Santa at local firehouses and precincts as a way to give back to New York’s Finest after 9/11. Over the past decade, he has expanded to visiting children at hospitals, orphanages and more.

However they got into the business, most Santas today seem to do a mix of charity visits and commercial work, with the latter piece being rather lucrative.

Santa’s average hourly rate: $137.50

There are 169 Santas across the United States with profiles listed on Thumbtack. 79% of those Santas list their hourly rate, with the average hourly rate coming out to $137.50.

Of course, that rate varies quite a bit, depending on a few different factors. A number of Santas confirmed that metropolitan areas tend to be a bit more competitive and thus more expensive than rural areas, and that corporate events are often pricier than private parties. Most Santas charge higher fees on the weekends, and premium fees for visits on Christmas Eve or Christmas Day. There is usually an additional fee for a Mrs. Claus to come along, and most Santas charge extra for any significant travel. What’s the cheapest time to hire a Santa? Without a doubt, it’s before Thanksgiving, when rates are often discounted. And why not get into the holiday spirit early?

Santa badges of honor: a real beard and a first-rate suit

All of those fees go in part towards offsetting the considerable personal investment that goes into being a top-notch St. Nick.

There are two key badges of honor in the Santa industry: a real beard and a first-rate suit. Most Santas we talked to said that they owned multiple suits, with the cheapest suits costing $500-$700, and the highest-quality suits retailing for anywhere from $1,000 to $5,000.

The best Santas take pride in their full beards and their stocky frames, delightedly proclaiming their natural ability to fill out a Santa suit. Growing out a beard may be cheap (if time-consuming), but purchasing a suit is no small matter.

For true top-of-the-line suits, most Santas swear by Adele’s of Hollywood, a legendary costume shop in Los Angeles which has been providing tailor-made Santa suits since 1945. Between a luxurious suit of velvet and real fur, authentic leather boots and a belt with a shiny brass buckle, there’s a lot of personal overhead that goes into being a first-class Santa, which echoes the reminder we heard from a number of Santas that you can’t just be in the business for the money.

Santa’s perks: classy soirees, helicopter rides, and photo shoots

That being said, there are definitely some perks to becoming a successful St. Nick, as it turns out that Santa gets invited to some very classy soirees. Our Santa in Texas informed us that in a past year he played Santa at a corporate holiday party at the ExxonMobil world headquarters. John Sullivan, a Santa in Chicago, is looking forward to an event this year in which he will be flown into a country club via helicopter (Rudolph needs a few nights off the job, after all). There are also quite a few syndication opportunities for Santas who can get into the market for commercials or catalog photo shoots, which one Santa said can pay up to $2,000 a day.

With all these opportunities for Santa appearances, the industry has become increasingly competitive over the years. How does a great Kris Kringle stand out from the crowd? Most of the Santas we talked to said that you don’t necessarily need to go to a Santa School to become a good St. Nick. Our Santa in New York said that Santa Schools cover the basics of the job, but they omit many of the increasingly significant business strategies.

How Santas market themselves

It’s becoming more important for successful Santas to establish unique and memorable brands for themselves, which is often accompanied by a strong online presence.

A number of the Santas we spoke to run their own professional websites, such as New York Santa, Professional Santa Claus and Santa In Chicago. Aspiring Santas looking for industry tips can keep their eye out for New York Santa’s 600-page manual (hopefully soon to be published) detailing everything from the history of Santa Claus through how to trademark your own distinctive Santa brand.

There’s also plenty to be learned from observing other Santas on the job. As it turns out, these Santas have quite a few tricks up their red velvet sleeves! For example, New York Santa revealed a secret tactic which prepares him to be tested on any language. He always carries a faux “Naughty or Nice” list, which is actually filled with the phonetic spellings of “Merry Christmas” in dozens of different languages. Sretan Božić! (That’s Croatian for you).

According to Barry Strawser, a Santa in the Bay Area, there are currently over 4,000 Santas for hire throughout the United States. So if you’re a consumer planning a Santa appearance for your upcoming holiday gathering, what should you be looking for when you’re selecting the perfect St. Nick? As we mentioned above, hourly rates vary quite a bit, and prices don’t really tell the full story of what makes a great Santa.

Tips for hiring a Santa

Here are some of the top consumer tips we received from Santas around the country:

  • Safety: Every Santa we spoke to emphasized that safety must be a top priority, particularly if you are selecting a Santa to interact with children. Our Santa in Maryland said that the charities he works with run nationwide criminal background checks on all of their Santas every year, and the best Santas go the extra mile to provide police reports, letters of reference and insurance policies.
  • Experience: Most Santas stress years of practice as the crucial factor that sets the best Santas apart. After all, anyone can put on a red suit and say “ho-ho-ho,” but what does Santa do if a child is too scared to hop up on his lap? Or what if a child asks Santa to bring Fido back? It’s only through years of experience that the best Santas learn how to handle the most delicate scenarios.
  • Personality: When it comes to picking a Santa, you can’t just go by what you read. You’ve got to call up your potential St. Nick and chat for a while in order to get a genuine sense of how he interacts with people. The best Santas truly love meeting people. They understand how to listen and interact with children, and they are pros at conveying a sense of magic and excitement.

We learned a lot about the ins and outs of the Santa industry, but what resonated most of all was a phrase that was invoked by more than one Santa: “It has to be in your heart.” We asked every Santa, “What is your favorite thing about the job?” and without missing a beat, they all simply said, “The kids.” A true Santa finds joy in seeing children’s faces light up, and delights in bringing happiness and excitement to children and their families.

And as we all know, kids sure do say the darndest things. One Santa told us about a little boy who asked Santa to bring him Mars. The candy bar? Nope, the planet. Another child, upon seeing Santa walk through the door, whispered to his friend, “I know that’s the real Santa…I’ve seen him before!” And then of course, there are a few children every year who say they don’t want any gifts, because they want Santa to give presents to the kids who really don’t have anything at all. And what does Santa say to that? “Well, that makes you just like Santa.”

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A/B test: New York Times, Washington Post logos help conversions; USA Today logo hurts conversions

by Thumbtack | November 29, 2011 at 5:20 am

Many websites display the logos of media outlets that have run stories about or that mention that site.

For example, we display various press logos prominently on our homepage.

Press logos are thought to increase website conversions. And since website conversions are likely an SEO signal, adding press logos to your site might even give you a small SEO bump.

One thing we have always wondered, though: Does this actually work?

Do people really use your website more if you display famous newspaper logos on it?

And if newspaper logos encourage visitors to use your website, which newspaper brands do it the best?

We didn’t know. So we ran a test to find out.

We found some things we expected – and other things that surprised us:

  • Including multiple press logos together on our landing pages increased conversions by 17%.
  • However, certain newspaper brands performed better than others when placed alone on our landing pages:
    • The Washington Post and the New York Times were the most trusted brands among consumers, increasing conversions among consumers by 32% and 29%, respectively.
    • The Wall Street Journal was the must trusted brand among local service professionals, increasing conversions among professionals by 8%.
    • Despite having the second-highest circulation of any U.S. newspaper, the USA Today was the least trusted brand among both consumers and local service professionals, actually decreasing conversions by 25% and 13%, respectively.

Here are the details:

Test #1: Newspaper Logos vs. No Newspaper Logos

The first thing we tested was whether having newspaper logos on our site increases conversions.

We didn’t even include links to the articles that mentioned us – just the logos of the papers.

Whether or not the insinuation is correct, the idea here is to demonstrate to visitors that Thumbtack is trustworthy because Thumbtack has at least been mentioned at some point in these publications.

We tested this on our landing pages – these are pages that include a list of service professionals in a certain category and certain city (like this one for photographers in San Francisco or this one for house cleaning services in Chicago). These are the pages that many visitors see when they find us from search engines.

Demonstrating trust may be particularly important for a company like ours that is built on trust – it is a major leap of faith to hire a tutor into your home, a contractor to work on your bathroom, or a caterer to serve at your wedding.

Many of these visitors have never heard of our company before, and this page is our best shot at making a good first impression on them.

What did we find?

Including press logos on our landing pages increased conversions by 17%.

A “conversion” for us is when a visitor clicks “Get free quotes” – if a user clicks that form and fills out their information, we’ll send them 3-5 bids on their job to their email inbox within 24 hours. This is a win for us, a win for the professionals listed on our site, and a win for the consumer.

These results were tested on more than 6,000 visitors to our landing pages.

The takeaway?

If your company has been mentioned in many famous newspapers, you should include those logos on your site to increase conversions.

Test #2: Mano a Mano – The Brands Face Off

We were curious which of the four big newspaper brands that have mentioned us had the most credibility with the visitors to our site.

So we ran a test: When surfaced alone, which newspaper brands converted the best – and the worst?

A quick note here – since Thumbtack is a marketplace with buyers and sellers, there are two types of people that use our site.

The first type of person is the entrepreneurial service professional – she is the handyman, the photographer, or the tutor who lists herself on our site. About 5,000 new entrepreneurs list themselves on our site weekly, and more than 220,000 have now listed themselves on Thumbtack.

The landing page we tested for entrepreneurs is this one, where the professional can list their service on our site.

The second type of person is the consumer – he is the person who visits our site looking for a carpenter, a magician, or a graphic designer.

The landing page we tested for consumers is the same one as above (like this one), where the consumer can tell us the job they need completed.

Here are the results we found:

Who were the winners?

The Washington Post and the New York Times were the most trusted brands among consumers, increasing conversions by 32% and 29%, respectively.

For consumers who visited our site for the first time, the Washington Post and the New York Times were by far the most trusted brands – when shown alone, they increased conversions by 32% and 29%, respectively.

Keep in mind that the consumers who come to our site presumably have money to spend – so maybe they’re higher-income people who love their Times and their Post.

The Wall Street Journal was the most trusted brand among local service professionals, increasing conversions by 8%.

The business-oriented entrepreneurs who list their services on Thumbtack seem to trust the Wall Street Journal more than the Times, the Post, or USA Today.

And who was the loser?

USA Today was the least trusted brand among both consumers and local service professionals, decreasing consumer signups by 25% and local service professional signups by 13%.

USA Today is the second-most popular newspaper by circulation in the U.S. – and it has more revenue than Google does in the U.S..

But placing USA Today’s logo on our site actually decreased conversions significantly.

These results were measured across 15,000 visitors to our site.

Takeaway: Placing press logos on your site isn’t a guaranteed winner.

We were amazed at the difference in trust among brands between the two groups of people.

The consumers on Thumbtack tend towards the high-income, female, and shopper demographics. These people seem to love their New York Times and their Washington Post – and not their Wall Street Journal.

Conversely, the service professionals on Thumbtack tend towards the middle-income, blue-collar, entrepreneur demographics. These people seem to respect the Wall Street Journal a lot – and actively distrust the New York Times.

As for USA Today? We have no idea why this hugely popular newspaper would have decreased conversions across the board. Your guess is as good as ours.

Whatever the reasons, our tests showed that press logos can increase conversions – but certainly not always. Whether adding press logos to your site increases conversions depends on which logos you’re adding and what kind of audience visits your site.

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Are you an engineer? Thumbtack is an awesome place to work and is hiring – check out our job listing here.

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New data shows undergraduate degree likely worth no more than a technical college degree

by Thumbtack | November 14, 2011 at 7:06 am

Is an undergraduate degree worth more than a technical college degree?

We thought this wasn’t even a serious question – “Of course”, we presumed. “People wouldn’t pay for four years of undergraduate tuition if they could earn the same amount afterwards by attending a two-year technical college.”

However, we checked – and double-checked – the data from 225,000 local service professionals who have listed themselves on Thumbtack. And we were very surprised by what we found.

Tens of thousands of local service professionals on Thumbtack have attained either a technical college degree or an undergraduate degree – and their average hourly rates are exactly the same.

We asked some of our members: “What is the highest level of education you have reached?”

And about half of Thumbtack’s members advertise the hourly rate of their service on their listing (like this person).

When we mapped average hourly rate against educational achievement, we expected to see hourly rates rise with a higher level of education.

And that’s exactly what we found – except that the hourly rate for those with technical degrees and those with undergraduate degrees was exactly the same.

Methodology

More than 5,000 local service professionals nationwide list their businesses on Thumbtack every week. These include general contractors, wedding photographers, Bollywood dancers, and any other kind of service professional you can imagine. 225,000 local service professionals have listed themselves on Thumbtack since 2009.

About half of the professionals that list themselves on Thumbtack advertise their hourly rate on their listing. And many of these individuals have also responded to a survey in which we asked them: “What is the highest level of education you have reached?”

11,354 service professionals included their educational credentials in this survey.

These service professionals are spread out nationwide and in all categories available on Thumbtack.

The United States is a service economy premised on the ideal that more education always means a higher income. However, this data calls that ideal into question.

Numerous observers – including the Wall Street Journal, venture capitalist Peter Thiel, and the Chronicle of Higher Education – have recently questioned whether paying for an undergraduate education is worth the sometimes steep cost.

There are many situations in which an undergraduate degree is worth the investment: it’s a necessary springboard for becoming a doctor or lawyer or investment banker. And there are many non-monetary benefits of pursuing higher education, such as expanding your intellectual horizons and meeting new people. However, it is very clear from our data that an undergraduate degree is, in strictly financial terms, often a poor investment.

More than one third of Thumbtack’s 225,000 service professionals have received an undergraduate degree. According to the College Board, the tuition and fees of an undergraduate degree amount to about $40,000 for public schools. This implies that Thumbtack’s service professionals have spent at least $3.2 billion on degrees that have not boosted their earnings above workers with only a technical degree.

There are at least 20 million service professionals in the United States, which suggests that the current service sector workforce has spent at least $240 billion on undergraduate degrees that have resulted in incomes no different than individuals with a technical degree.

The true cost is likely much higher.

These figures are a lower bound because many people go to private schools – which cost two or three times as much as public schools. These figures also only account for the cost of tuition and fees, and include neither the cost of rent and other living expenses, nor the opportunity cost of lost wages during years students could have spent working.

This data is further evidence that attending a four-year college to obtain an undergraduate degree may be no better for your career than attending a two-year technical college.

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Are you an engineer? Thumbtack is an awesome place to work and is hiring – check out our job listing here.

Are you a journalist interested in this post? Email press@thumbtack.com.

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Case study: Are daily deal discounts inflated?

by Thumbtack | October 13, 2011 at 9:49 am

Last week we published a study showing that many daily deals for local services (like house cleaning, handyman services, and interior painting) are priced equal to or higher than the average local price of the service.

Something in that study really caught our attention: the regular prices quoted by Groupon and LivingSocial seemed strikingly high.

We made some phone calls last week to merchants who had run deals on Groupon or Livingsocial, and it turns out our instincts seem to have been right.

In 8 of the 10 deals we reviewed, the “regular” prices quoted by Groupon and Livingsocial were higher than the prices quoted by the same merchants when we called them.

Of five Groupon merchants that we called, all quoted prices lower than the merchant’s regular price advertised by Groupon.

Of five LivingSocial merchants that we called, three quoted prices lower than the merchant’s regular price advertised by LivingSocial.

A quick note on methodology: For each deal we reviewed, we called the merchant and asked for their regular price on the same service offered by the daily deal. For example, if a house cleaning deal was limited to two hours of routine cleaning in a well-taken-care-of home in zip code 98765, then that’s exactly what we asked about. We never asked for a discount or a good deal. And we’re reporting here every call we made – we haven’t excluded from this post any calls we made where the merchant quoted us the same price as was advertised by the daily deal site.

11% of daily deals are for local services.

Before diving into the details, here’s a bit of background on the local services industry. The people in the local services industry are local professionals like home contractors, house cleaners, portrait photographers, wedding planners, math tutors, and graphic designers. According to Groupon, 11% of Groupon’s deals fall into this “services” category. An example of one of these types of deals is “$49 for Two Hours of House Cleaning in San Francisco – 67% Savings“.

Also according to Groupon, the company worked with 45,665 North American merchants in the first half of 2011. If 11% of these are merchants that fall within the “services” category, then Groupon featured deals from about 5,000 North American local services merchants in the first six months of 2011.

More than 200,000 local businesses have now listed themselves on Thumbtack, and about 40% of these – or about 80,000 professionals – have listed with us the hourly price they charge. For example, this wedding photographer charges $200-225 per hour for her services.

We initially started looking into daily deals pricing because we have unusual data – average hourly pricing for local services across the U.S. This data is pretty hard to come by. We thought this data could help illuminate the strange pricing trends we saw for daily deals in the local services industry.

The regular rates of many Groupon and LivingSocial merchants seemed much higher than the average local rates. So we called the merchants to get quotes and see how the quotes compared with the rate advertised by the daily deal site.

What did we find?

On September 19, 2011, Groupon offered two hours of home cleaning services in Phoenix for $49, a discount of 67% from the regular price of $150.

We called the merchant who offered this deal and asked for a price quote for the same service offered by the deal – two hours of simple cleaning in one of the zip codes covered by the deal.

The non-discounted price for the cleaning advertised by Groupon? $150. The price we were quoted for two hours of home cleaning? $80.

More than 510 people purchased a deal that Groupon advertised as regularly costing $150. But the price we were quoted over the phone was $80, 47% lower than the regular price advertised by Groupon.

Another example:

On August 24, 2011, Groupon offered carpet cleaning for a 200 sq. ft. room in San Francisco for $45, a discount of 78% from the regular price of $200.

Again, we called the merchant to get a price quote for the same service. We were quoted $160 for a carpet cleaning for a 300 square foot room.

Groupon’s advertised regular rate: $200 for 200 sq. ft. of carpet cleaning, or $1 per sq. ft.

The price we were quoted? $160 for 300 sq. ft. of carpet cleaning, or $0.53 per sq. ft. At $0.53 per sq. ft., the cleaning for a 200 sq. ft room would cost $106.

Groupon advertised the service as regularly costing $200. But the equivalent price we were quoted over phone was $106, 47% lower than the regular price advertised by Groupon.

Other examples:

Every Groupon merchant we called quoted us a price that was lower than the regular price advertised by Groupon.

We did the same for five LivingSocial deals.

On August 29, 2011, LivingSocial offered interior painting of one 12′x12′ room in Kansas City for $89, a discount of 56% from the regular price of $200.

We called the merchant who offered this deal and asked for a price quote for the same service offered by the deal – a simple interior painting of a 12′x12′ room in downtown Kansas City.

The non-discounted price for the painting service advertised by LivingSocial? $200. The price we were quoted? $150.

46 people purchased a deal that LivingSocial advertised as regularly costing $200. But the price we were quoted over the phone was $150, 25% lower than the regular price advertised by LivingSocial.

Other examples:

Two LivingSocial merchants quoted us the exact regular price advertised by LivingSocial:

Of the five LivingSocial merchants we contacted, three quoted prices lower than the regular price advertised by LivingSocial.

Has anyone else encountered this phenomenon when transacting with a merchant who has previously offered a daily deal?

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That daily deal you bought? Maybe not so great a deal after all

by Thumbtack | October 3, 2011 at 11:53 am

 

Lots of research has been done to see whether daily deals are a good deal for small businesses. However, not much research has been done to see whether daily deals are always a good deal for consumers.

Presumably this is because daily deals are always a good deal for consumers – otherwise nobody would buy them, right?

In most cases, that’s right. However, we’ve done some research into the sector of the daily deals industry with which we’re most familiar – the local services industry. And the data show that daily deals for local services – like handymen, house cleaners, or painters – can actually be bad deals for consumers.

Here’s what we found:

Many daily deals in the local services industry are priced equal to or higher than the average local price of the service

  • A good portion of daily deals in the local services industry seem to offer prices that are equal to or higher than the average price of the service city-wide. For example, we show below that Groupon recently offered home cleaning services in Phoenix for $24.50/hour – when the average rate of all cleaning services in Phoenix is $23.50/hour.
  • Daily deal sites frequently offer deals in the local services industry that are significantly higher than regular prices offered by many local professionals. If Groupon’s deal for home cleaning services in Phoenix is $24.50/hour and the average rate of all cleaning services in Phoenix is $23.50/hour, then you should be able to find a good home cleaner in Phoenix for less than $23.50/hour. Our data confirms this – of the last fifty bids that came through our site on Phoenix home cleaning jobs, 22 professionals offered their services for less than $23.50/hour, with a low rate of $17.50/hour.
  • If a daily deal offers little or no discount below the average price of the service – or a premium above the price you could get through a bidding process – then it doesn’t make sense to buy the deal. You would be forced to use the professional offered by the deal site (rather than choose your own), you would take the risk that you will never use the coupon, and you would be giving a lot of money to the daily deal site – rather than putting that money into the pocket of the local professional. There’s also no reason to rush into buying a daily deal if the same or lower price is always available to you.

11% of daily deals are for local services

First, a bit of background on what we mean by the “local services industry.” The people in the local services industry are local professionals like home contractors, house cleaners, portrait photographers, wedding planners, math tutors, and graphic designers. According to Groupon, 11% of Groupon’s deals fall into this “services” category. An example of one of these types of deals is “$49 for Two Hours of House Cleaning in San Francisco – 67% Savings“.

Also according to Groupon, they worked with 45,665 North American merchants in the first half of 2011. If 11% of these are merchants that fall within the “services” category, then Groupon featured deals from about 5,000 North American local services merchants in the first six months of 2011.

More than 200,000 local businesses have now listed themselves on Thumbtack, and about 40% of these – or about 80,000 professionals – have listed with us the hourly price they charge. For example, this wedding and portrait photographer charges $100-150 per hour for her services.

So we have lots of hourly pricing data for a lot of local services merchants across the U.S.

When BuyWithMe offers house cleaning in San Francisco for $60 – a stated discount of 57% – or Livingsocial offers interior painting in Kansas City for $89 – a stated discount of 56% – are consumers really saving money?

Maybe. And maybe not.

Let’s take a look.

5 daily deals, 5 above-market rates

On September 19, 2011, Groupon offered two hours of home cleaning services in Phoenix for $49 - a stated discount of 67% from a regular price of $150.

As of today, 126 home cleaning companies in Phoenix have listed themselves and given their hourly rate on Thumbtack. What’s the average hourly rate of these cleaning services in Phoenix? $23.50.

The average rate of house cleaning services in Phoenix is $23.50/hour… yet the “deal” purchased on Groupon by more than 500 people is for home cleaning services at $24.50/hour, discounted from a ‘normal’ rate of $75/hour.

We also took a look at the last fifty bids that have come through our site on jobs for home cleaners in Phoenix. Of these 50 bids, 22 were below the city-wide average of $23.50/hour, with a low bid of $17.50/hour.

Let’s look at another example.

On February 13, 2011, Groupon offered $79 for two hours of handyman services in Seattle – a stated discount of 64% from a regular price of $220.

57 Seattle handymen have listed themselves on Thumbtack. Their average hourly rate? $42. And of the last 50 bids on our site for handyman jobs in Seattle, 21 were for handyman services below $42/hour with a low of $32.50/hour.

Soooo… Groupon’s normal rate? $110. Groupon’s discounted rate? $39.50 The average hourly rate city-wide? $42. The rate you can find every day on a bidding site? $32.50.

I’m not sure I see much of a “deal” here.

Some other examples I came across:

August 28, 2011: Groupon offers two hours of maid service for $45 in Chicago – a discount to $22.50/hour from a regular rate of $45/hour. The average rate of 62 Chicago maids listed on Thumbtack? $20/hour. The low rate we’ve seen recently by bidding? $16/hour.

August 22, 2011: Groupon offers two hours of handyman services for $75 in Houston - a discount to $37.50/hour from a regular rate of $75/hour. The average rate of 39 Houston handymen listed on Thumbtack? $35/hour. The low rate we’ve seen recently by bidding? $27.50/hour.

July 19, 2011: Livingsocial offers interior painting of one 12′x12′ room for $150 in Boston – a discount from a regular price of $800.  We asked five Boston painters how long they thought it would take to paint such a room, and the average of their responses was 4 hours. If it takes 4 hours for a pro to paint a 12′x12′ room, that’s $37.50/hr, a discount from a regular rate of $200/hr. The average rate of 34 Boston interior painters listed on Thumbtack? $35/hour. The low rate we’ve seen recently by bidding? $30/hour.

To be fair, these are just some data points. We don’t have data about the average prices that Groupon and others charge for local service jobs. Maybe these examples are higher than the average rates typically charged by daily deal sites.

A better deal is out there

And finally, let’s keep this in mind: these average hourly prices on Thumbtack are just that – average prices.

If price is what you primarily care about, it’s pretty easy to find someone with a lower price than average. Just call around – or use a free bidding service (like ours) that brings you 3-5 bids on your job to your email inbox within 24 hours.

You’re probably saving money most times that you use a daily deal site. But if you’re hiring a local service professional, you may want to think twice before jumping on the newest ‘deal’ that comes into your inbox.

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New Feature: Text Message Notifications!

by Sander | September 15, 2011 at 1:31 pm

How often do you check your email?

Are you an email addict, checking your email every other minute during your waking hours? If so… join the club. We’re right there with you.

Or do you only check a couple times a day? Maybe you’re fixing someone’s car, carting your kid around to basketball practice, or just doing something more exciting than monitoring your inbox all day.

If you fall into the second group, this feature’s for you.

Today we’re introducing text message notification of job leads.

Thumbtack is sending more than 100,000 job notifications every week – hopefully these job leads will now be even more useful to you.

Here’s how it works:

If you have a phone number on file with us, you’ll get a text message from us every time there’s a new job for you.

The text message will include a link to a page where you can reply to the potential customer from your phone.

And the texts are only sent during the daytime – so no midnight notifications to disturb your beauty sleep.

Don’t want text messages sent to your phone? No problemo. You can go here to disable text notifications of job leads. Or you can text ‘Stop’ in reply to any notification.

Want to receive text messages but don’t have a mobile phone number on file with us? You can set up this feature by going to your notification settings and adding your phone number (“Send text messages to: -> another phone number”).

We’re hoping this new program will allow you to respond more quickly and conveniently to job notifications. After all, the faster you respond to a job, the more likely you are to please the potential client and win the job. Responding to a job within the first hour of being notified about it more than doubles your chances of meeting with the client and getting their business.

We’re also hoping this brings bids more quickly to those who post jobs on Thumbtack. We hear frequently that people are delighted when they post a job on Thumbtack and are in touch with a business or two within 20 or 30 minutes.

We think this could be a win-win for everyone.

We’ve heard requests for this feature for months now. We’ve known it’s something we needed to add for even longer. And now it has made it to the top of our priority list. Here goes!

Do you think this is a tool you’ll be using? Let us know in the comments below.

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Photo courtesy of davham via Flickr

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Hurricane Irene: Thumbtack Seeks to Help

by Sander | August 27, 2011 at 5:40 pm

Like everyone else, we’ve been closely following all of the coverage of Hurricane Irene.

Our thoughts go out to all the people on the East Coast affected by the storm, and we hope the storm brings as little damage and harm as possible.

Thumbtack and our 5,000+ storm clean-up and repair professionals on the East Coast would like to do our part to help people repair their homes and businesses after the storm passes.

We’ve been working hard this weekend and are launching three new programs to help our fellow citizens after the storm:

  1. Storm Recovery Help: We’ve pulled together service professionals who can help clean up, repair roofs, fix broken windows, remove debris, and repair water damage. Go to our Hurricane Irene Recovery Center to find service professionals ready to help.
  2. Concierge Service: If a resident of the East Coast needs special help, please email us at HurricaneHelp@Thumbtack.com and we’ll prioritize your email and reach out to you immediately to get you the help you need.
  3. Completely Free: Thumbtack is always free for consumers. We make money by asking our service professionals to pay lead fees or commissions on their jobs. We’ve completely waived all fees for service professionals in states affected by Hurricane Irene for the next week so that nothing stands in the way of our service professionals helping people affected by the storm.

We know this is a bad storm for many people. We have many friends and family who are holed up for the weekend throughout the East Coast. We want to do what we can to help out with the clean up effort.

Stay safe.

The Thumbtack Team

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4 Reasons We Changed Our Homepage Design

by Sander | August 10, 2011 at 2:37 pm

Today we’re thrilled to announce that we have rolled out a new homepage design.

The new design showcases a number of initiatives we’ve been working on. Here’s a walk-through of the changes.

1. A new way to browse Thumbtack

We recently rolled out category-based navigation – something we call the “Thumbtack Market”.

We’re promoting this navigation prominently in our new design. Why?

It’s the best way we can think of to showcase the huge variety of expertise that can be found on Thumbtack.

More than 180,000 local professionals advertise their services on Thumbtack. At last count, these amazing professionals offer more than 1,200 different kinds of services. Even if you’re really, really imaginative – you probably can’t imagine some of the talents listed on Thumbtack.

Previously, the only way to search our site was to manually enter the type of professional you were looking for – you actually had to type “photographer” or “math tutor.” How arduous!!

It was also really difficult to discover those services you’d never think to search for – like Lady Gaga’s vocal coach, Twilight book site tours, or sheep shearers (!).

Now, you can browse the 180,000+ professionals listed on Thumbtack just by clicking on the categories of your choice. Hopefully it’ll now be a lot easier to quickly find the services you need and to discover hidden gems.

2. More people-centric

Thumbtack is nothing but a community of people who are some of the most hard-working and trustworthy professionals you’ll find anywhere.

These individuals have now undergone more than 200,000 background checks, license checks, and other identity verifications intended to ensure a safe marketplace. We have also kicked out more than 10,000 service providers that did not meet our community standards.

We decided to highlight the human faces of the true Thumbtack rock stars – you guys.

3. Better explanation of Thumbtack’s free bidding service

Thumbtack offers a service that not many people know about. This service will bring 3-5 bids on any job you can imagine, in any part of the country, straight to your email inbox – and all within 24 hours. This service is entirely free.

We believe that the current method of searching for local services – looking through the Yellow Pages, calling a number of different professionals, wondering who is the best person for the best price and the best quality – is so 20th century.

We think that using our bidding process to easily find the best person for the job at the best price is the future of local search.

4. We just wanted a change

We launched our first homepage in 2009. We launched our second homepage later that year. We launched our third homepage in 2010. We’ve had our current homepage for more than a year. We thought it was about time for a change!

Just for fun, here’s a look at the history of Thumbtack’s homepage:

 2009

2009-2010

2010

Today

We love producing good design – and we hope you approve!

Do you like the new homepage? Hate it? Think it should be purple? Let us know in the comments!

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