What is the thinking behind mail-in rebates?

Question

1)Is the customer actually getting a good deal from this?
2)Does the customer actually end up paying less than they would normally (once the rebate has been sent in)?
3)How could the company possibly benefit from this?
4)Or does the store jack the price up before the rebate and then put a rebate on it so that the final price after rebate ends up being the same as it normally would?
5)What makes mail in rebates enticing?

Answer 1

The company offers rebates to increase sales. They are making enough profit even on the sale of the unit minus the rebate. Plus they count on people being lazy and not sending the rebate in, so they don't actually have to pay out all the rebates. It's only a good deal for the consumer if you remember to send in and follow up on the rebate.

Answer 2

1). It depends on what kind of deal. Some mail-in rebate only gives you little or some gives you a lot.
2). Yes, the customers actually end up paying less than they would normally.
3). The company benefits from mail-in rebate based on a few reasons. Such as: not everybody turns in the rebate on time. If they turn it late or they don't submit all the required paperwork they won't get the rebate. It usually gives the company about 30 days to keep the customers' money, which means they can deposit the money and make interest from it. So by the time they have to send in the rebate they already make some money.
4). No, it is not legal to jack up the price before the rebate and then put a rebate on it.
5). Main-in rebates are enticing because the companies don't have to give the discount right away. They can hold the money and then make some interest out from it. It also gives them customers' information. They can get the name, address, email address, phone number, etc. At the end they can use the information to advertise.

I always make sure that I submit my mail-in rebates on time and with all required paperwork.

Answer 3

The thinking is less people will go for the rebate as they have to mail it in. It requires a minimum amount of effort and you know how lazy people can be.