As we approach the 2009 Christmas season, there will be rebates on just about everything. What a deal! A mail-in rebate of $50 on a $75 Printer! Then you see a huge rebate on that new laptop, blu-ray player or HD TV, and you can’t buy the item fast enough.
You (snail) mailed in your rebate form and months have passed and you’ve never gotten your rebate check (or card). You’ve called the company, written letters, but to no avail.
The company either sent you a denial letter, or gave you all sorts of reasons why you won’t be getting your rebate: you didn’t purchase it within the correct time frame, didn’t mail it correctly, or you forgot to include some obscure piece of information. Basically, you failed to jump through their hoops, and now they are going to keep your money.
What bull right?
Rebates are actually intended to be a hassle to discourage customers from redeeming them. After all, the more customers who forget or give up on rebates, the more dollars the manufacturer retains. “Rebates are a good business plan only when consumers fail to claim them,” ARS analyst Gary Peterson recently told The Wall Street Journal.
Why do rebates exist?
Rebates started as a marketing tool used by manufacturers to increase sales, by lowering the cost of a product in the eyes of a customer, without actually dropping the price on the shelf.
Why not just drop the price?
When a company drops the price of something, that money is automatically and immediately lost for each and every item sold, while rebates never result in all of the money being lost to the company. Thats where the system of denial and “lost” rebate forms come in. Even if they processed 100% of all rebates, consumers would never send in every rebate for ever item. A win-win for manufactures.
Rebates also give companies the ability to make money off your money. Customers are giving them an additional $100 for 3 months, and they lower the price for you $10. Now multiply that by a million customers, and they just made 3 Million dollars in interest.
Rebates help them not you.