Are Rebates Scandalous?

theodp asks: "Motley Fool offers a dead-on take on the computer mail-in rebate fulfillment process--Once I receive your 'claim,' I will begin to 'process' it. Assuming that you filled out all the information correctly, and assuming nothing is missing, and assuming your claim doesn't get lost somehow, and if you call or write a few times to check on your claim's status, then I will mail your check within 10 to 12 weeks. Maybe. Or maybe it'll be four to six months. Or never." What are your thoughts on rebates, and have any of you noticed who, at least in the computing industry, is more trustworthy with rebates than others? Update by J : Here's the short version of the article.

Comments

rebates are a total waste of time

[Alpha27]

At times I forget to send them in. What should happen is the selling company, should take it upon themselves to handle the rebate for you in store, instead of you dealing with the nonsense paper trail of it.

Re:rebates are a total waste of time

[martyn s]

But that's kind of the point. Most people don't bother because it's such a hassle, but they still buy the product because they believe that they will bother. They think they're getting a deal based on the assumption that they will follow through with the rebate.

Re:rebates are a total waste of time

[Lemmy Caution]

The way rebates work is that the seller gets almost all the benefits of a sale price - getting to list something as being $300! (after rebate) for only a fraction of the cost. It's simply a fact that only a fraction of the people who buy the goods will successfully apply for the rebate: multiply that fraction by the amount of the rebate, and you have the amount they actually have to lose per unit sale while getting virtually all of the competitive advantage of announcing the discount.

Re:rebates are a total waste of time

[Zenin]

For myself I've realized I'm simply not going to send rebates in. I've let $100 rebates go at times that I thought when I bought the item, "It's $100, this I'll send in for sure, I'm not that stupid...". Yes, yes I am...

I must say that my buying life has been much, much less stressful and guilt-free since I adopted the position that rebates simply don't exist. Whatever the non-rebate price is, that's my price and my choice to buy it or not will based on that, not the mythical rebate/smail spam sign up that won't ever actually happen.

Rebates suck.

Re:rebates are a total waste of time

[mcheu]

In most cases, I pretend there is no rebate to be safe. That's what people really should do. Certainly send in the rebates, of course. The companies pretty much count on you forgetting or not bothering with them. Whatever rebates you don't send for is more profit for them. Don't count on the rebate money. When you buy, just buy it based on the sticker price. When you actually get a rebate, treat it as you would if you found it on the street or won it in the lottery. It's extra cash. If you don't get it, it's not really worth losing sleep over it, but if you do. Cool.

Rebates are another scam

[realdpk]

They're buying your personal information so they can either use it to fill your mailbox with their junk or everyone's junk. There's no other reason for them not to do rebates at the POS/cash register.

Regarding computer-related rebates, they are even worse. I bought some CDR media that was "$2 after $10 rebate". I had a weak moment and figured it was worth the $10. The Best Buy receipt offered a way to file your rebate request online. I thought, great! Mailing rebate requests is sure lame!

So I go to punch in the rebate information and am presented with a page that I can print and USPS mail in.

Completely worthless, except now some additinoal "rebate processor" company also has my information.

Re:Rebates are another scam

[Chris Carollo]

There's no other reason for them not to do rebates at the POS/cash register.

Of course there is! Few people actually go through the process of filling out and sending in the rebate. So they can get customers to think of the price in terms of the rebate, but often don't actually have to "honor" the price.

Personally, I'm pretty religious about sending in my rebates and have only ever had good results. Of course, if everyone did that they'd stop offering them, so for all you folks that don't send in your rebates, thanks!

For a company, rebates are wonderful.

[wowbagger]

For a company, rebates are wonderful:

1. They get you to buy one product over the other.
2. The probability of a person filing for a rebate is less than 1.0, therefor a rebate is less expensive to the company than an equal price cut.
3. By adding arbitrary restrictions (no P.O. Boxes for one) they can further reduce the probability of you getting a rebate.
4. They get to use your money for a while - that "float" can make them even more money.
5. They get your name and address to add to their mailing list. They can also sell that information to others, making even more money.

Curiously enough, these are much the same set of reasons that a rebate is bad for the consumer.

There is one other bad thing about rebates from a consumer's point of view: you pay sales tax on the non-discounted price of the item.

Other reason: price differentiation

[f97tosc]

Many posts correctly point out that these discounts are designed so that many who intend to send them in never bother/ succeed. But there is actually a more subtle reason as well; the same reason that supermarkets use coupons (as opposed to just lowering the price).

That reason is price differentiation. If the company charges a high price, they sell few units at a high margin; a low price means more units a lower margin. By introducing these coupon schemes, they can charge different prices for the same product. Price-sensitive customers go through the trouble of filling in the coupons, insensitive ones don't. It is the best of both worlds!

Another example of price differentiation is university tuition. There it is called "financial aid" - a scheme clearly designed to make everyone pay exactly what they can afford (note: I am not saying that there is something wrong with financial aid; I am just pointing out that it is very much in the financial interest of the universities).

Tor

Re:Some links

[Pharmboy]

What the hell is the point of having instant rebates instead of just lowering the price?

It called Marketing. As the resident evil capitalist, please allow me to explain...

1. They can be used to 'not' lower the price for price matching policies. "Yea, you bought it last week but the price is still $100, we just have a rebate. We can't give you the rebate if you bought then."

2. They can be used to make people think that the factory is giving us this money, its not that we are overcharging you the rest of the time. "Its $100, before a $50 rebate, but we would lose money if we sold it for $50" Really, Im not making it up. I get paid for this stuff.

3. Sense of urgency. Its for a limited time only. This is true for all sales, but with rebates, the message, and response is stronger. "act now or miss out".

4. Convenience. Rebates are dubious at best, but with an 'instant rebate' you know you can't get ripped off. So its a better value, because there is no risk. Even though it IS the same as reducing the price, it is called "transfering the risk" to the seller, instead of to you. It works.

5. Its a different kind of sale. All sales are good. Very often, an instant rebate is used on NEW items at their introductory price. IE: This item is $150 with a $50 instant rebate. After the rebate is gone, we put it on sale for $100.

Its all marketing, thats all. The above may not make sense to some of you. Good. Thats the idea. Many of you will smugly say that the above is stupid. Thats good, too. The more 'stupid' you think these sales tricks are, the more likely you are to fall for them. I'm not making it up either, it REALLY does work that way. But that is why they (we) do instant rebates: Because it works very very well, especially for quazi impulse purchases.

Remember boys and girls, you do NOT have to be evil to be in Marketing, but it helps. ;) Trust me (and who wouldn't?), its what I have done for a living for around 20 years now.

Re:rebates are NOT a total waste of time

[SirGeek]

I've almost never had a problem getting rebates done. Only once did I ever have to wait a really long time. The company lost its investment funding and didn't expect the huge response they got for the item. It took me over a year to get 75 bucks but they made good on it.

Also, how to prevent information from being sold ? You can't, but how do you deal with potential SPAM ? Each company gets their own rebate address. Also the only company that really seems to sell information is Staples.

I've gone out now 3 years now, and spent over 1500 and gotten 1200 of it back. (and I DO track my rebates).

What people are probably doing (not doing ?) is following the instructions EXACTLY so of course they get screwed.

The only products I won't buy now are Mad Dog (they keep screwing my rebates claiming a problem).