Rebates are widely used by all manner of businesses and manufacturers to stimulate interest in their services and products. They are different from straight discounts or coupons, as the benefit occurs after the sale instead of at the time of purchase. The amounts are similarly wide-ranging, from a dollar on low-priced consumer goods to thousands of dollars for cars and trucks. Companies also use rebates to sell overstocked or slow-selling items.
Method
Rebate offers typically come in the nature of a form issued by companies to those who purchase their products, and usually carry an expiration date. Consumers then complete the form and mail it in, together with some sort of verification, such as a receipt or the package's Universal Product Code. These commonly go to third-party clearinghouses that provide verification and send out checks. Consumers who keep their eye out for rebate forms on packages and advertisements, as well as in retail stores, can often reap substantial savings.
Advantages
Consumers find rebates to be a tangible benefit, and they can enhance the shopping experience. Another advantage is that the Internal Revenue Service considers rebates price reductions rather than income, so these transactions are tax-free. Manufacturers are continually drawn to use rebates as sales inducements and to increase visibility. Retailers like them because they help move merchandise and require no extra work on their part.
Additional Manufacturer Benefits
Manufacturers realize that many people will not follow through with the rebate process, so the initial enticement that may motivate a purchase often does not cost the manufacturer anything. According to USA Today: "On small items, actually retrieving the savings doesn't, for many, outweigh the time and effort required. An item advertised at $2.49 after a $1 rebate is really $3.49 at checkout. To get the dollar back requires the paperwork, plus 37 cents or more to mail it in. But even with a higher-priced item, such as a $150 inkjet printer after a $50 rebate, redemption is nowhere near 100 percent."
