What is the reasoning behind mail-in rebates?

Answer 1

Mail-in rebates require you to send a lot of personal information about yourself in order to get the money. There are several reasons companies do this, and they all have to do with making money:
1. They want your personal info to understand what kind of person buys their product. This allow them to focus advertising on the right kind of people, which will drive sales up.
2. Once you send in your rebate form, they know that you are the kind of person who buys that sort of product (whatever you bought), and who is a sucker for a rebate. Now they can send you additional rebate offers for similar products, and there's a pretty good chance they'll make some extra money off of you.
3. The retailer will advertise the after-rebate price, which generates additional sales. But most people don't actually send in the rebate form, so the manufacturer wins $ again. i.e., they sold more stuff, but didn't have to pay very many rebates
4. The personal information you send in the rebate form is very valuable. The company will make a lot of money by selling your info to other companies, who will in turn send you a bunch of marketing stuff with rebate offers, and the cycle will continue...

Answer 2

I have heard it said that it is so they can appear to be giving a better deal.

If they discounted something by $25, then it would cost them $25 on each and everyone that goes out the door.

-BUT-

If they advertise a $100 mail-in rebate, knowing that only 1 in 10 people, good intentioned as they may be, will actually get around to mailing the rebate before the deadline, it only costs $100 for 10 that went out the door, resulting in increased profit to the manufacturer of $150, compared to discounting the item in the first place.

Answer 3

Two-fold:

1. Retailers don't need to drop their prices in their inventory systems.
2. A good percentage of people will forget to (or don't care to) send in the mail-in rebates, which means the manufacturer doesn't have to pay out 100% of the rebates.

Answer 4

A retailer will promote mail in rebates b/c it does not have to lower its profit margin to gain costumers. Approx. 2% of consumers actually redeem their rebates from manufacturers, therefore the loss from the promotion is greatly outweighed by the increased profits from increased sales.
A smart consumer will take advantage of the situation and mail in their rebate. The interest lost on a small amount of money over six to eight weeks (avg. return time) is insignifcant for a consumer when compared to the actual rebate, but additive for a manufacturer. Always think of money in terms of interest lost or gained.

Answer 5

It's a gimmick that manufacturers use in order to get an idea of the demographics on who is purchasing their products. You will notice most rebate paperwork has a bunch of questions about your interests, how old you are, obviously where you live. This helps them with marketing their products to various people.

Answer 6

It's incentive, like a discount. Although, I believe they don't just give you the discount outright because they're hoping you'll forget about it, as most people do. Plus, they have a lot of "fine print" rules that a lot of people don't notice. If you don't fill out the form to a "t", you probably won't get your rebate and there's really nothing you can do about it. It's really just a way to get more money from you.

Answer 7

Boosting sales. They, the companies that offer such, also know that a percentage of the rebates will never be processed since people forget, do not have time, etc., to send them in.

Answer 8

They probably can collect interest by not giving you the discount right away. Plus like the others mentioned, if you forget to send in the coupon, they don't have to pay you. Some people (like myself) are too lazy to lick a stamp and put it on an envelope to get their money back.

Answer 9

So that the store will put you on their mailing list and that you may, highly likly, go back to the store