Computer Rebates Not As Sinister As You Think

Lam1969 writes "Robert Mitchell dug up some details about rebates after getting up at 5 a.m. to get a free (with rebates) computer bundle at Circuit City. He had to deal with five separate mail-in rebates to get his money back, and decided to ask an expert about whether rebate come-ons are some sort of attempt to trick consumers. The reply: 'The big lie that the media and attorneys general want you to believe is that all the retailers and manufacturers are crooked and the reason [they] do rebates is breakage, which is people not turning them in.' Furthermore, Mitchell reports that retailers are making the process easier, by printing rebate forms and receipt copies at the register, and letting people track rebates online. His conclusion: The trade-off of having to do a few hours of copying and envelope-stuffing is worth the price of a new computer, so stop whining -- 'suck it up and accept your rebate check like a man.'"

Comments

Easier still?

[jarich]

Furthermore, Mitchell reports that retailers are making the process easier, by printing rebate forms and receipt copies at the register,

Why don't they take it one step further and file it for us as well? Then we can just take the rebate off at the register? I don't mind paying sales tax on the full price.

Re:Easier still?

[taustin]

Or better yet, just reduce the price at the cash register. It's called "putting the item on sale," and it works really well.

Re:Easier still?

[fish waffle]

There are two ways this can make them money:

You missed one:

3) it's effectively a forced registration. Customer lists are an important asset for both internal uses and for sale to other companies.

Re:Easier still?

[jsrober]

Adding a rebate is a way for manufacturers to discount goods already in the supply chain (they already sold them to distributors and retailers). It's the ONLY way that the manufacturer can VERY QUICKLY stimulate buyers to buy their products.

Re:Easier still?

[beakerMeep]

Ah yes that's very true. And with those lists they can claim a prior business relationship with you getting around most spam and marketing laws (such as the do not call list).

Re:Easier still?

[dgatwood]

Put another way (and this is how they are generally used), a rebate is a mechanism for a manufacturer to quickly clear out old stock in the supply chain prior to the introduction of a new model. These have a tendency to fall nearly prior to product release cycles for many companies. If you don't mind buying a product that you know is about to be replaced by a newer model, it gives you a way to get a product at a cheaper price than you otherwise would.

It is also often used as a way to avoid lowering a price on an item that is currently being sold at above market rates, allowing the business to pretend that they weren't screwing the customer originally. Perfect example would be hard drives at Fry's. As a general rule, if there's no rebate, you're paying way too much. This allows them to raise the price back up to the pre-sale value without the public perception that they are raising the price. They aren't; they're ending a rebate. It's just one of the dirty little tricks that many retailers do when they aren't able to move products due to overpricing.

Why? Tell us WHY?

[Chmarr]

If the manufacturers REALLY wanted us ALL to send in the rebate forms, and were NOT expecting this 'breakage'... then why? Tell us WHY you have this convoluted rebate system in place, rather than offering us a lower price WITHOUT the rebate system?

The ONLY reason I can think of is that they want to collect the interest on my $40 cheque between the time I've bought the product, and cashed the rebate check. Surely they could not be earning enough interest on that to warrant the expense of maintaining the rebate system.

The only OTHER reason I can think of is so the manufacturer can advertise the 'after rebate' price, but exclude bunches of people from being able to obtain that price (ie, multiple orders, businesses, etc).

Well, okay, I think I just answered my own question :)

Valid rebates

[BushCheney08]

Something the article seems to miss is that many rebate processing houses like to invalidate rebates for no reason whatsoever. They often claim that you didn't include all of the materials, or that they weren't mailed in time. I've had this happen to me several times. Thankfully I've kept copies of everything, which I was able to fax to them to "prove" that I did send everything that was required. If rebate houses behaved a little more honestly, they wouldn't have such a bad reputation.

Rebates as a way to get your personal info

[wired_parrot]

What about rebates as a way to get around privacy laws by making you fork over all your personal data in exchange for the rebate? For me, this one of the things I disliked the most about rebates - I shouldn't have to pay an extra premium on my purchases because I refuse to give out my contact information the company.

Is this just a US phenomenon?

[tosspot1]

Are there other countries doing this? I must admit I haven't been everywhere, but I've been to a quite a few countries, and usually when something is advertised at a price, that's the price it is. You don't have to "earn" your discount by performing some sort of (irritating) action after the purchase.

So is this done anywhere outside of the US? If I suggested this idea to my friends and neighbours they'd probably look at my like I was crazy.

I mean, let's think about the process. The consumer fills in a form, and mails it to the company. The company then has to fill in another form (known as a cheque, or since it is the US I suppose we'd better call it a check), and post it back to the consumer. The consumer then takes the check and posts it to their bank. Their bank then processes, creates additional paperwork and posts it to the company's bank to verify the signature. Presumably at that point the money transfer is done electronically.

Is there something wrong with this? Are not a lot of resources being consumed unnecessarily? Why do they persist with this stupidity? Why don't governments simply pass laws to encourage retailers and manufacturers to deal in a more straightforward way with consumers?

Or am I missing something here?

Re:I hate rebates

[pappy97]

"If you want to give me a lower price, give me a lower price."

Exactly. Is it SO revolutionary of a concept TO JUST GIVE US THE LOWER PRICE???

Rebates only exist as a way to jack up the price and make money off the 70% of people who won't correctly send in the rebate.

For example, let's say an item should cost $49.99.

Best Buy will come up with a brilliant idea. Sell it for $69.99, but offer a rebate that supposedly makes the effective price of the item say $19.99.

BB advertises the price to be $19.99, but with tiny lettering about rebates. Now idiot consumer goes into the store, lured in by the ad, buys the item for $69.99, and forgets to mail in the rebate.

What's the problem here? THE ORIGINAL PRICE OF THE ITEM WAS $49.99. Best Buy not only got people to come in and make purchases with the alluring ad, they were able to use the rebate system as a way to JACK UP the original price of the item.

It's scam written all over it.

If you want to people to come in and ACTUALLY take a loss on a item, then just slash the price for that item to get people in the store. Some of these places do it on Black Friday, but why not for other days?

In Wal*Mart's with a grocery department, Wal*Mart takes a loss on its entire grocery dept (yes, the ENTIRE dept operates at a loss) to get people in the store to buy the stuff they have 300% mark-ups (From their paid price) on. Best Buy can do the same thing, without trying to be greedy in a SCAM sort of way.

Re:Who is this, Joe Isuzu?

[timeOday]

1) Breakage. But this reason has been in steady decline and is increasingly unjustifiable. While it used to be that only 40% of rebates were turned in, that number has been steadily climbing for the past ten years

Says who? Do you have a link? The rebate fulfillment rate is the one hard piece of information this article could have provided that would have been really interesting to me, and speaks volumes more than some ad-guy spin. But no, he couldn't or didn't report it.

BS or as the french say leBullshit

[bogie]

"The big lie that the media and attorneys"

You just know he wanted to say

"The big lie that the LIBERAL media and TRIAL attorneys..." I'm a

Rebates are the tool of the devil. The put them out full well knowing that something like only 40% of rebates are returned. If they actully gave a shit about their customers they would give the break at the register and not put us through this dance.

Oh and interesting how one of the two times I've done rebates in that past Bestbuy screwed me saying I hadn't included something. I can't tell you how many times I've heard of people having the same thing happen to them. I avoid them at all costs.

IMHO they should be 100% illegal. Give us the price at the register or don't advertise it. Or how about this? Say its $100 with a $50 rebate. I'll pay $25 and promise to send you that extra $25 within 4 to 8 weeks.

Differential pricing

[PsiPsiStar]

I'm surprised noone's mentioned differential pricing yet.

Companies want to make as much money as possible. (duh)

Lets say person A is willing to buy a particular hard drive for $20.
Person B is willing to spend $25.

If you set the price at $20, you don't make as much money as you could.
If you set the price at $25, you lose a customer.

Ideally, you get each person to pay the most that they're willing to pay.
Rebates help accomplish this. A person who makes a high salary will be willing to pay more for an item, and they'll value their time more. They won't send in the rebate.

A person who values their time less and makes less money will take the time to fill in the rebate.

To put it another way;

When I lived in China, you had to haggle over the price of most goods. If you sat there and haggled for half an hour, you could get the price down. A person who made more money wouldn't see the value in haggling for half an hour for a few quarters of a price reduction, and would pay a higher price just to get the sale done. Rebates accomplish the same thing, without requiring any inefficiency on the part of the seller.

I'm sure there are other reasons as well, but this would seem to be one use for a (deliberately inconvenient) rebate.

I have a guess on this.

[tkrotchko]

I think there are companies that essentially assume the debt of rebate and then make money on not paying them.

What I mean is, if you are "SuperComputerManufacturer" and offer a rebate of $10 on 1 million items, you now have a liability of $10M dollars.

I think that companies will then bid on the debt to pay the rebate. In otherwords, they'll bid an asking price of $9M. Therefore the manfacturer gets out of $10M of debt for $9M, and the rebate company makes $???? money by assuing they'll only get x% of the rebates properly cashed. So every rebate they deny is essentially their money.

It really makes perfect sense (although this is pure supposition).

And if this turns out to be viable business model, I own the patent.