All About Rebates Part 1: What is a Mail in Rebate? Why Should I Submit for a Rebate?
Last Update: 4/13/2016
Do you hate rebates? We do too. Here is how to make them work in your favor.
A rebate, by definition is a money back after you purchase an item. They are usually a partial refund of the purchase price. Mail in rebates (MIR) are ones where you fill out a form and get money back. Rebates are given by either the store or the manufacturer of the product. Manufacturer rebates are sometimes valid only at a particular store.
For many people, rebates are simply more trouble than they are worth: after filling out tedious paperwork and sending in the proper codes and receipts, the manufacturer could take up to two months to tell you that you failed to submit the right upc barcode, that the offer expired, or some other reason why it will not honor the rebate.
When you consider that scenario, you might be tempted to disregard all rebates in the future. But take a minute to consider the bigger picture – mail-in rebates have been around for decades and companies continue to offer them for a reason.
Here’s an overview of the rebate process and some ways to work the system and ensure you get the most out of a rebate every time.
Why Offer Rebates at All?
Rebates exist for four overall reasons:
- 1. To help sell a product that isn’t selling
- 2. To let the manufacturer lower the cost of a product without dropping the price for the merchant.
A merchant purchases products from a manufacturer at a certain price. The merchant uses this “wholesale” price to determine the mark-up to customers and their expected profit from the sale. If the manufacturer later lowers the retail price of a product, the manufacturer would be forced to pay the merchant the difference because the merchant has now “overpaid” for the product. However, by offering a rebate, the manufacturer is allowing the consumer to seek the difference after they have paid the merchant the full price for the item.
- 3. Because redemption rates of rebates are extremely low
It is estimated that less than 50% of all rebates are ever redeemed. This high percentage usually only applies to the big-ticket rebates ($150 off a laptop purchase, for example). Not surprisingly, smaller rebate redemption levels are often under 10%.
This makes sense, of course, when you figure it may take you an hour of filling out tiny boxes, multiple copies of forms, an envelope and a stamp to receive $5 back…it’s just too much trouble. Overall, a fair estimate of redemption rates is within the 10 – 30% range, give or take. Not bad odds for the manufacturers!
- 4. People who purchase items for business use can write off the full amount of the price on their taxes and pocket the rebate for themselves.
An extra $150 in your personal checking account, while writing off the full cost as a business expense, is often enough motivation to steer a customer to a rebate product over another.
Before you Purchase
If you find the rebate online, save the rebate form on your computer and print it out.
Thoroughly read the rebate, paying close attention to the small print – that’s where they bury the really important information. For example, make sure you will receive the item in time to submit the rebate. If the rebate expires in 3 days and you are ordering the item online with standard shipping, there’s no way you will be able to submit the rebate before it expires. Even if you can register the rebate online (Staples offers this option), you want to be sure not to cut it too close.
Some rebates have order expiration dates that might be based in a different time zone. Say the rebate requires an order date of 12/31/2016 11:59pm EST. If you order the item at 12/31/2016 11:58pm PST, you might not qualify for the rebate. Do not cut it so close!
Finally, check for other limitations, such as household maximums: some limit the redemptions to “one per household” and some state “one per person” which could mean four redemptions if you have four people in your house who qualify. Also, determine whether the merchant you are purchasing from will qualify for rebate purposes. Some rebates will only apply to purchases made through specific vendors.
Here’s a handy mail in rebate pre-purchase checklist:
- 1. Does the merchant you’re purchasing from qualify for the rebate?
- 2. Have you exceeded your household quota on the rebate?
- 3. Do you have time to submit the rebate before the expiration?
- 4. Did you save a copy of the rebate form?
- 5. Do you actually WANT the product?
Next in All About Mail in Rebates Part 2, we continue our examination of mail-in rebates with instructions on how to fill out and check on your rebates.