Why do companies offer rebates?

[LintBalll]

Yes, ditto to the prof. If the manufacturer lowers the price to the retailer, the market price has been lowered and competitors will/may follow, lowering recoveries and margins for the entire market. Rebates keep retailer sales level but still provide incentives without damaging market prices.

 

[Denogginizer]

Well, I almost got screwed out of $110 worth of rebates, because both Staples and HP removed the rebate forms for the HP 315 digital camera from their web sites. Luckily, someone on the forum posted links to the rebate forms, I thought I'd have to be stuck paying full price. Guess there's no secret why they remove all traces of the rebate form the second the offer ends (despite the rebate still being valid for another month).

 

[laugh]

the extreme case: cyberrebate.

 

[Carnivore99]

Chain stores and the suppliers that cater to them also use rebates because it protects the stores from having problems with their "low price guarantees".

For example, if the industry-wide price of hard drives drops, and a big chain store lowers their shelf prices, they have to pay out cash to everyone who comes in asking for a refund of the difference under their price protection policy. If they use a rebate to lower the price, then they don't have to pay out money to customers who bought the same product within the past 60 days, or whatever it is.

In another scenario, if Best Buy wants to have a sale on CD-RW drives, they can use a rebate so their competitors supposedly won't be able to price-match them, thus ensuring that they are the only store customers can go to for the deal. Of course, smart readers on this forum know that this tactic frequently backfires in our favor.

 

[buffalotoys.com]

When I worked at Fisher-Price, we always had rebates and NEVER had coupons. (Later they did start with coupons a bit)

Inside the company, noone made any bones about the reasoning behind it - rebates increased sales because of the perceived lower cost, but only a fraction of them were actually ever mailed in. That simple.

Coupons on the other hand have a very high redemption rate.

 

[geldrop]

hi

 

[prenatal]

The posters that think rebates are a greedy, unfair ploy by manufacturers are a bunch of hypocrites. WHY are you on AnandTech Hot Deals forum? To be lured into these "big corporation/government" tax-grubbing schemes to CHEAT the consumer? HAH! Just think of rebates as the buyers not sending in the rebate subsidizing the buyers who do. Everybody wins!

 

[lotust]

circuitcity SUCKs for these rebates. I got burnt on over 150$ in rebates.

never will i buy something with a rebate from them.

 

[dos4who]

Well, I saved my first post for something useful... A good friend of mine is a professor of marketing - The stats are "for rebates between $2 and $1000, the national average (covers both Canada & the US) is that only 51% of rebates are mailed in. Companies bank on this.

As for covering your a$$ on a rebate, I have ALWAYS made 2 photocopies of the rebate, the receipt and the UPC snippet. I keep one in a file for reference - the other, I enclose with the rebate... I figure it lets them know that "I have my own copy...so don't try $crewing me".

PS - Thank you all for your contributions to this board

~m

 

[cupcake]

rebates are the devil.

they should never be a huge deciding factor when making a purchase.

think of them a an interesting possibility that might or might not happen.


_cup

 

[GetReal]

Retailers and manufacturers do not plot to cheat consumers out of rebates and do not count on a certain percentage of rebates not being submitted by consumers. These statements are simply modern urban legends created by some to compensate for the inability of some consumers to follow directions and submit rebate requests in accordance with the rebate program rules. These are some exceptions where the rebate company does inaccurately invalidate a rebate request, but in most cases you can call them and they will correct the error often without requesting additional proof of your claim. Rebate programs are under the jurisdiction of the Federal Trade Commission and any problems with a specific rebate program should be directed to the FTC.

Rebates are offerd for one reason. Rebates are considered promotional advertising with respect to current US tax code and all expenses incurred in a promotional rebate programs can be written off 100% in the tax period that they are incurred. The tax relief act of 1986 provided companies this new provision to write off inventories as advertising expenses in lieu of the traditional cost-basis depreciation that was in effect previously. Over the past decade or so, companies have learned how to effectively use rebate programs to increase sales. This is especially true for publicly traded companies. Management at these companies often uses rebates to create the illusion of increased sales for stockholders or to take advantage of a needed tax write-off for a specific tax period. When you consider the cost of other types of advertising, rebates are extremely cost effective. For example, if you take all the legitimate PMs, $$ and free coupons, and rebates offered and redeemed by Staples in an entire year, they still would not equal the cost of printing and distributing a national multi-page color insert in your Sunday newspaper for one week.

There are basically two types of rebates. The first type is the end-user or consumer rebates that are offered directly by a manufacturer or retailer. The second type is a manufacturer or distributor rebate offered to retailers to stock or a specific product or product line or to liquidate an already stocked product or product line. The first type is fairly self-explanatory and is the type that most of us deal with on a daily basis. The second type is a bit more obscure. Retailers often use the second type of rebate when they offer sale items to lower their price and still maintain the same profit margins. Retailers sometimes pass along this second type of rebate (or a percentage) to their customers in the form of a retailer rebate. Retailers often user a combination of the first and second type of rebates to offer items for free after rebate(s).

 

[Roy2001]

I just calculated and found that I am waiting for $460 rebate checks, that not include the creative speakers and software for another $50.

 

[jimmyhaha]

Rebate is EVIL

when rebate got rejected, headache begins..

few scenarios

1. need to call the line and wait,and worse still no one answer
2. email the Rebate fullfillment company, no one reply
3. even 1 and 2 work, need to resubmit the whole SHXX...

last resort...

wirte a letter to BBB, FTC or corporate headquarter and mention about
fraud, class law action...

this works 99%...
still a headache..

hmm...

what can I say more

EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL EVIL

I am NOT alone...
bunch of anandtechers are with me so peace out

 

[Wolfgang]

GetReal,

It seems really clear to me, just based on experience, that they DO try to make sure a certain percentage of the rebates fail -- this is why there's sometimes so much fine print, have very tight deadlines, confusing/misleading forms, and so forth.

They also routinely and brazenly delay payment -- again, a conscious strategy to earn more money off of consumers, for if not that, then what?? (It's unusual to have a rebate check within the contractual time frame, in my experience.)

You may be right about rebates helping to expense instead of depreciate inventory -- I've no way to tell. But it sure seems obvious from nearly universal experience that the rebate fulfilment centers do indeed try to minimize and delay rebate payments on commonly, though not typically, arbitrary grounds.

This doesn't necessarily mean its directly willful: they could just be harnessing their own incompetence to serve themselves. "No check for 20 weeks? Our mistake -- glad you caught it! Let's see if you catch our next one!"

 

[Wolfgang]

dude,

That article you referred us to -- The How and Why of Rebates -- is a good one. Thanks.

 

[ddiccico]

<< Do some of you really use registered mail to send in rebates? I never do because I figure it cuts your rebate profit margin. I just checked USPS.com and registered mail is over $7 for a one once letter! Certified with proof of delivery is $3.94! If you used those services each time, imagine how much you'd waste to save some money maybe one time. It's just like insurance on packages--if you are only going to lose a package in the mail maybe once or twice, why pay to insure every package? >>

Yeah, but for a $100 (or even $50) it's worth it to know they can't claim they didn't receive the letter - and if you photocopy everything you can show them that all the forms were filled out correctly if they say they weren't.



<< If a rebate company has a problem with my submitted rebate, I just call them up and they will straighten things out. They do not want angry customers who feel cheated out of a rebate. They are trusting too, because they know how easily an honest person can mess up a rebate by accident. >>

I'll assume this last part is a joke.

 

[BLoop]

souja, saw your post about the Sprint rebate and here is a link on the Best Buy site that I stumbled across before. Rebate Questions. If you page down a little bit you'll see:

How can I get a copy of my receipt?

Online Purchases - If your order was placed online and you would like a copy of your receipt, sign into the My Account section and click on My Order History at the top of the page. Select the order you want the receipt for and scroll to the bottom. Click on the Create a Receipt button and then print.

In-Store Purchases - If your purchase originated in a Best Buy store, you may contact Consumer Relations at 1-888-BESTBUY (1-888-237-8289) and a representative will help you obtain a receipt.

Don't know if that'll help but it may be worth a shot to call.

 

[hotstuff2000]

It's true that not all buyers will send in their rebates. But the reason companies use coupon/rebates period is because often greedy resellers will not pass on price cuts when companies cut the price of their products. WIth a coupon or a rebate, the money goes directly to the buyer. A lower price to the buyer means higher demand and more sales

That being said, I'm sure rebates are used to differentiate between those who care about the price and those who do not. EVERYONE would use a coupon but only a few will send in a rebate.

 

[hoihtah]

simply put...
we do rebates 'cause we know how to make money.

for example... barns &amp; noble book stores do not generate money for the store itself.
the b&amp;m generates cash... and the corporate site invests the money in stocks and other things. and from that profit, they can afford nice couches and cool a/c for people to sit and just chillax for hours sipping cappuchinos.

rebates generate cash. you don't really think that it takes 6-8 weeks to get those papers processed.... do you?

 

[CLiu]

>the UPC snippet. I keep one in a file for reference - the >other, I enclose with the rebate... I figure it lets them >know that &quot;I have my own copy...so don't try $crewing me&quot;.

I did that once and got a post card saying that I didn't send the original copy. After some phone calls and e-mails, I got the rebate 156 days (instead of 8 weeks) after I submitted it. I figured that the person never thoroughly checked the envelope.

Does anyone else have similar experience?

cpliu

 

[hoihtah]

oh... and by the way,
wrong forum. please try again...
at OT.

 

[Denogginizer]

Here's one that I haven't seen mentioned. This applies especially to larger, tech-oriented companies. By offering rebates of $100-$200 per (lets say, computers in this case), they can clear out some extra inventory and make way for a new product. However, they are able to announce their profits for the quarter on what people spent *before rebate!* The cost of the entire rebate promotion is then listed as a &quot;one-time operating cost,&quot; (and even these are sometimes offset by the sale of stock, or other one-time gains). So for example, company XYZ can say &quot;In our recent quarter, we made a $251 million dollar profit, or $.17 cents per diluted share, up 22% from last quarter! (Before one-time costs related to marketing promotions; profits were $30 million or $.02 per share after these one-time costs).

Makes the silly analysts and wall-streeters happier in most cases!

 

[Infos]

Greetings fellow AAters:

re Canadians getting screwed by paying 15%(except lucky Alberta)
of rebates I really don't believe there is any co-operation between
the govt and &quot;big business&quot;.
What it is, is our screwed up legislative process where
bureaucrats oftentimes write legislation and since we have
a joke senate a lot of crap falls through the cracks.
The American system of working on legislation in committee often
gets rid of these type things that screw the consumer.
What we need in Canada is for the average citizen to get really
angry at the way our govt does us ie taxes on taxes on gas and not
having a tax per gallon rather than a percentage like they do.
There's no way Americans would put up with the crap we have to endure
in Canada. We need to get vocal and get up off all fours.

Have a nice day

:|

 

[claffeyb]

Boy, we've run through the gamut of opinions here - from accountants to finance professors, marketing weenies, and economics profs. Great question.

I side primarily with the marketing and accounting views. First and foremost, the tax laws as was astutely pointed out earlier. This may be over-simplified and not spot-on, but from what I recall in classes 20 years ago, the companies get to &quot;set aside&quot; a huge wad of dough, as if all avaiable rebates would be turned in, and this sits around earning interest. Also, this large amount of money is off the books for tax purposes, decreasing the amount they are liable to pay taxes on for that quarter the rebate is good for. And of course, they ALWAYS have rebates going on.

The other reason is marketing - perception of a good deal and a normal higher price. If the price was always $10, you'd then expect someone to have it on sale for sometime for $9. If you have it at $39 with a $20 rebate, you can still sell many at the $39 in-between rebate times, sell many at $39 for those that forget or lose rebates or miss the deadlines, and sell many many more at the true value, perhaps, of $10.

 

[nekote]

When I send in $200+ dollars worth of rebates to &quot;Staples&quot; in Coppell, TX, yer' darn toot'n I spend $4+ for certified / return receipt requested.

Most especially when I also included, in the same package, about $100+ of rebates truly for my neighbor (many items the same), as well as each and every rebate request with its own online rebate registration form &amp; the UPC &amp; receipt original or copy in its own separately addressed bloom'n envelope.

Mailed in the whole rebate request package in on Monday 7/2 w/USPS First Class, green return receipt postcard postmarked 7/9 (the next Monday), 7/31 (22 calendar days later) received email stating: &quot;We are happy to inform you that your rebate submission for ... has been received&quot;. All in &quot;processing&quot;, now.