Why do companies offer rebates?

[skeletor]

I'm from Europe where rebates are unheard of (no doubt someone will prove me wrong, suffice to say I'venever heard of them!). I'm wondering why American companies offer rebates on products. Are they banking on the fact that a lot of people won't bother sending in the coupon to claim their money back? That would seem to me to make the most sense, otherwise why not just offer the product at the lower price.

Do you have to sacrifice personal info (filling out question sheets etc) for these rebates. Are they always honoured or do the companies sometimes come back with: "We're sorry but seeing as you purchased our product with your *left* hand we cannot offer the rebate, had you paid with your *right* hand there would be no problem" or something equally nit-picky?

Cheers.

 

[IgorFL]

Actually, you've hit the reason on the head. Most consumers in America, according to the companies, never send in the rebates.

 

[Gusfo0]

Why do birds fly?
Why is the sky blue?
How many licks does it take to get to the tootsie roll center of a tootsie pop?

All these question and MORE answered here.

 

[dude]

http://sfgate.com/cgi-bin/article.c...2000/12/18/BU142549.DTL&type=tech_article

 

[dude]

Your linkie didna workie.

 

[Vendetta]

Rebates in America are quite useful for corporations to drum up quick sales at occasionally exorbitant prices. The rebate process, for the consumer, has two breakpoints:

1. Never sending the rebate in. This happens most frequently with smaller items that, after rebate, are free. Case in point, the free after $10 rebate remote control from Circuit City. I bought it for $10, but never bothered to send in the rebate because I was busy, etc. I estimate that better than 75% of rebate forms aren't turned in, at least for smaller items like this, and this is what makes rebates profitable for companies.

2. Once the rebate is sent in, typically the consumer has no way if it's recieved, whether it was accepted or not, what the status is, etc. A simple way to screw over the consumer is to shred the incoming rebate forms and claim that they were recieved illegible, or weren't recieved at all.

The solution to these problems is simply to make sure to send the rebate form in, and to send it in a sealed envelope, Certified mail so you get a form with signature proving that they did indeed recieve it. I did this with the $100 rebate for the MP3 player from Staples.com, and I got the rebate within two months.

 

[kaiotes]

if they are counting on me never to send in a rebate for the money , they are dreaming.
what kind of fool would purchase a product knowingly it contains a rebate not send in one.

 

[Tokeniso]

I sent a Staples rebate for a desklamp in for $3 and recieved it

 

[MullySculder]

Why the company use REBATE?

1st, their products are overstock so they use rebates to clear out.
2nd, their products are not good as they expect
3rd, their products are not popular so Rebate can attract customers to buy products
4th, they BORROW the money from you to invest stocks in stock market or something that help their companies to get more profits.

Overall, for GREED!!!

 

[dbLA]

Years ago, I recall reading about a demographic study of people who use coupons (and I suspect that these coupon users are also the same people who do rebates). Anyway, they found that people with more money were more likely to use coupons. Yes, it's true -- we cheap bastards are richer than people who don't shop around to get the best price. "A penny saved is a penny earned" (Ben Franklin).

Why offer rebates (and coupons)?

1. Move excess inventory without lowering the shelf price.
2. Get "first adopters" (us cheap bastards) to try the product.
3. Sucker people into buying the product for full price, knowing that many of them are too lazy, or ________, or busy to fill out and send in the rebate paperwork.
4. Build or maintain brand loyalty.
5. Try to force a competitor out of business without being too obvious about it. In other words, some people think its "predatory" or "unfair competition" to sell products for less than what they cost to produce. (Think about Microsoft)

(Edit: It looks like a few people beat me to some of the above points while I was composing this)

 

[manly]

[snipped]



<<

The solution to these problems is simply to make sure to send the rebate form in, and to send it in a sealed envelope, Certified mail so you get a form with signature proving that they did indeed recieve it. I did this with the $100 rebate for the MP3 player from Staples.com, and I got the rebate within two months. >>




Is this really a good solution? Are there any limitations sending certified mail to a P.O. Box (the typical rebate address)?

 

[Anon]

6. To deceive unsuspected consumers to contribute more sales tax to government (in Canada). E.g. $700 Camera is advertised as $700-$700(rebate)=$0 to be the final cost, yet the retailers never remind you that $700+105(15%tax)-$700(rebate)=$105, so you pay $105 to government as the final cost, as opposed to instant $700 coupon that make you really pay $0 for it. Well, a nice example about the tight cooperation between big corporations and the government.

 

[BlueIce]

Wouldn't it be easier if the big corporation gave big government that $105 and then donate that remain $595 to me.

Big corporation would make a killing by saving on the support staff of the rebate dept. =)

 

[nekote]

I've read elsewhere that only 2% or 30% of rebates are either submitted or eventually paid out, don't really remember the exact qualifying specifications. Don't know the true numbers. Certainly interested to know!

Suffice it to say, so long as rebate dollars paid out + overhead (processing / postage / cutting checks / ... ) - alternative revenue from personal info &quot;sold&quot; for additional marketing +/- ... +/- ... still result in a net profit, companies can continue to offer rebates and still be profitable.

And yes, for big rebates, I also use Return Receipt requested for proof of delivery.

Theoretical question:
*IF* more or less all *offered* rebates were essentially all properly requested and paid in full, what would happen as a result?
#1) Rebate amounts reduced so net rebate program cost to companies remains the same? ($20 rebates become $10 or $5 rebates?)
#2) MIR are eliminated (elimininates those substantial overhead costs - $1, $2, $? per rebate request received / paid) and industry goes to Instant Rebates and / or true sales at real reduced prices - a straight deal right at the cash register - like the way it oughta' be?

#3) Whatever way it goes, the net dollars paid for &quot;rebate&quot; items becomes *higher* for diligent rebate filers / deal watchers and *lower* for those who are less diligent / careful?

 

[XFreebie]

Some unscrupulous companies try to get u to buy stuff they know they will never send u ur check even IF u sent all the right stuff in (ie IOMagic, Cyberrebate ect...)

And the companies that have scruples expect some to not send rebates in (i once lost a UPC for a scanner and missed out on a $50 rebate i was counting on). and of course they take ur private info and sell it to marketing companies, or use it in their own marketing department.

My question is why in europe do they always exploit woman's unclothed body parts in advertising? Why does Dannon use bare chested woman to get you to buy yogurt? If you buy their yogurt will you lose your bra or something?

 

[XFreebie]

oh and prolly the most important reason for rebate is so that the person infront of the line at the big compusa sale doesnt grab all the stuff and egay it... they can only grab one and do that

 

[XFreebie]

&quot;The more you have to cut and peel and put things together to complete the application, the fewer people will bother.&quot;

meaning the tuffer it is to get the upc off... less ppl try. kinda like that upc on the compusa can of Compressed Air that Free After Rebate. good luck cutting thru metal... and you would have to use all of the air or it would explode

 

[souja]

That Personal Web Page Builder software offered by Staples for $29 - $25 rebate (now $35 - $25 rebate) was designed solely to make money of people who do not send in the rebate. The number if hoops I had to jump through to get the envelope in the mail is nothing short of ridiculous

1. First of all the program came in a very plain box that looked as if someone had designed it in their basement. Inside was a cd and a postcard.

2. The rebate was on a sticker on the outside of the box that you had to look on the postcard inside to find. The outside of the box says to &quot;look inside for rebate&quot;. The sticker does not say anything like &quot;peel off for rebate&quot; or &quot;see reverse for rebate&quot;.

3. The rebate form sticker was sooo glossy, I had to put a piece of clear magic tape over it just to get any kind of ink to stay put on it. This was after 15 minutes of trying.

4. The rebate center is in CANADA. Now I have to make a trip to the post office just to make sure there is correct postage to mail off the thing.

I just can't believe the nerve of some companies. My hunch is that this program is a Staples created scheme to recoup money lost from hot deals and coupon stacking. :0

 

[souja]

I also lost over $200 in Sprint PCS rebates from Best Buy because the salesperson at Best Buy made copies of the receipt. On the rebate forms that spit out from the register, it says you need to send in &quot;copies of the receipt&quot; [exact wording]. So the BB employee strolled me over to the copy machine and made 5-6 copies of my receipt and told me to send it in.

I fill out all the rebates and send it in to Sprint and a month later I get all of them back saying I did not have the correct copy of receipt. I called them and they said I need the copy that comes out of the register. I complained of course and I was just sent to another number which told me to resend everything back (now after expiry) and see what happens.

Haven't heard from anybody since.

Best Buy was no help either. They said they could not reprint anything.

Oh well...

 

[nekote]

For $200 bucks, that's worth a couple of hours time fighting for.

I'm curious how it turns out.

Please post / PM me, at your pleasure. Thanks!

 

[swifty]

Mostly to get rid of items they want to get rid of but also
something most people overlook: in order to make claims of
how much they have sold - they register you with the product
and they can say: 1,000,000 people use our product...

They cannot use just sold items - most items are sold thru resellers
and its difficult to track - but mail from the end users
that is just valuable information for them

 

[CentralScrutinizer]

Another BIG reason rebates are used:

It is a way to clear out inventory held by vendors at higher prices.

For example, Maxtor sells hard drives to Best Buy, CompUSA, and Joes Computer Shack.

It wants to sell some products to boost sales on an aging line. Clear out some inventory. But, these stores are stocked up on inventory that they bought at much higher prices. How to get rid of the that inventory without forcing their vendors to sell at a loss? Offer rebates,


Another problem solved by rebates. Say Maxtor wants to dump invetory. It could just sel the inventory on Best Buy for half price, and it would sell.

Problem is, that really pisses off Compusa or Joe COmputer Shack, who just bought the inventory for twice the price a week earlier.

So, instead, the manufacturer maintains the wholesale price; it then offers a sale by issuing rebates; this clears out the inventory.

 

[diogenes571]

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?

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.

 

[manko]

It's already been touched upon here, but...My economics professor said rebates are a way of lowering prices to adjust for the market (to optimize profit along the supply and demand curve). Rebates allow the manufacturers to lower prices, without actually lowering the price. People would be outraged if the retail price was going up and down all the time. With rebates, the manufacturers just set the retail price optomistically high, then use a rebate to lower the price to move more product, or put the squeeze on competitors. The example used was Car sales and all the &quot;cash back&quot; deals, but I'm sure it applies everywhere.

Of course there are also all the already mentioned added bonuses of people not sending rebates in, etc.

 

[St. Nick]

I am extremly guilty of not returning my rebates... the last 3 big things i purchased I never did my rebates for... my handspring visor platinum, my toshiba dvd player, and my kodak photo printer...

Thats a few hundred dollars missed out im kinda dumb eh!