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

Rebates Suck

[Anonymous Coward]

• If you purchase in an area with sales tax, you must pay tax on the pre-rebate price.
• My experiences with rebates have been, shall we say, less than encouraging. I'm still waiting for the rebate from Best Buy for the WRT54G I bought about one year ago. Of course, since I had to send in original UPC codes etc, there's no way to restart the process.

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 :)

Re:Why? Tell us WHY?

[jeffmeden]

You forgot two other reasons: One: So called Earnings. They can claim, as a company, to have sold x dollars of merchandise, which is the price of the goods going out the door. They look better on paper even though they have the oncoming cost of rebates. Two: balancing out the 30 day return. The rebates are often only sent out under the condition that there is no way to return the item under any sort of no-risk clause. Either they make you mutilate the box and forfeit the reciept, or they hold the rebate until after the return period has expired. This means they only give the discount to good customers who don't cost them by returning their junk.

Just off the top of my head :-)

Re:Why? Tell us WHY?

[taustin]

Having worked in retail for 20+ years, most of it at fairly high levels, I can tell you why manufacturers do rebates: retailers demand them.

"We're WallyWorld, and we control 99.867% of the retail market for your product. If you don't offer a rebate, we won't advertise your product, we'll advertise your competitor's product. In fact, we won't even carry your product."

Retailers want rebates because it lets them hold (and advertise the hell out of) a sale without actually having to put anything on sale. The retailer benefits from increased revenue from more selling product at full price to the marks, er, consumers, who think they're getting a deal.

The failure rate for rebates - the percentage never actually paid, even though they're sent in, is also quite high, because manufacturers don't like rebates much at all.

Who is this, Joe Isuzu?

[Anonymous Coward]

He's lying.

Putting aside the obvious question (who the fuck is The NPD Group? Why, a marketing consultancy!), the guy who talked to the ComputerWorld reporter is full of shit at best ad bald-faced lying at worst.

I should know - I used to manage a service with rebates. (Hence the anon post.) The rebates were only cost effective because of breakage. In fact, we once had to reduce the rebate amount for a particular group of users who had too good a take rate (business users who would send in rebates en masse, for an IT product.) The only way we could tell customers they saved $XXX was because we knew some of them wouldn't turn it in.

If this so-called reporter had asked even one or two sources inside a company that uses rebates, instead of talking to a consultant who probably recommends them for a hefty fee, he would have figured this out.

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.

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:Duh

[Billly Gates]

I used to work at staples and we purposely put products out with expired rebates or a rebate that expired in mere days before consumers could file them in.

Also I bought a video card that was defective at compusa and it was teh last one in stock. The same exact card was available at circuit city for $60 more. Even with the rebates teh price would only equal the exact one at compusa.

So in other words you are getting no value at all depending on the product with the rebates. This is also assuming that the rebates are not expired. So yes whinning should be appropriate and I believe Circuit City does this to make consumers think they are getting a better deal when they see "BIG SAVINGS" on the price tags of the shelves.

This made me a customer who no longer shops at circuit city as a result. I supposed I could shop at ..gulp.. worst buy even though they treat their employees like dirt and seem to be the walmart of the tech industry.

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.

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.