Understanding Mail-in Rebates

A mail-in rebate is a special type of discount on a product. When a mail-in rebate is announced on something, its usually for a limited period of time, and usually with a particular retailer or on a particular model only. You don't get the discount upfront. You pay the non-discounted price, and then "mail in" a coupon alongwith the receipt and a cutting of the package barcode to a designated address. A few weeks later, you receive the rebate (discount amount) by check, also in the mail.

When I first came to America, I found the concept quite perplexing. I would often see advertisements offering huge discounts on a product through this method. For instance:

Regular Price: $54.99
Mail-in Rebate: $35.00
Price after rebate: $19.99

Once in a while, I would even see extreme cases:

Regular Price: $24.99
Mail-in Rebate: $24.99
Price after rebate: $0.00 !

Two questions would always bother me

  • How could the manufacturer offer such drastic discounts through this method? There had to be a catch.

  • Why go through the trouble of such a rebate? Why not just offer the discount upfront (using a coupon or a price reduction) and be done with it?

Eventually (and after claiming several rebates myself), I began to understand the hows and whys of mail-in rebates. The reason manufacturers and retailers offer these refunds are actually many. They end up getting several additional benefits through this route. Which is precisely why they offer bigger discounts. Having said that, the discounts are real from a consumer's point of view, and should be taken when offered. The only catch - it requires more effort on your part to claim the reduction.

Here are some reasons why mail-in rebates make a lot of sense to manufacturers and retailers (compared to upfront discounts):

  1. The process of getting the rebate is relatively cumbersome. You have to fill in a form, collect the receipt and a cutting of the barcode and mail it in within a defined time period. If you miss the time window, you forfeit the discount. Some people do miss sending their rebate forms, and that's the money the seller gets to keep.

  2. If you've mailed in your receipt and the barcode, chances are you won't be able to return the product easily, if you don't want it later.

  3. Since you pay full price upfront and receive the discount a few weeks later, the seller earns interest on the money for the turnaround time.

  4. The seller is able to collect valuable customer information through the filled in rebate form, and use it to analyze customer trends.

  5. The seller is able to protect the original price of the product. Once the rebate scheme period is over, the product stays at its current price. The seller doesn't need to revise the price upwards, thereby antagonizing customers.
  6. Like I said earlier, the reasons are many. But all said, if you remember to claim it, a mail-in rebate does give you a better discount compared to a coupon or a shopping sale.

    Mail-in rebates are quite popular in the area of consumer electronics, but are prevalent in other product categories also. If you need to keep track of who is offering a rebate scheme at a given point in time, try the following sites:

    Return from Mail-in Rebates to the Household Goods main page