The whole money back thing makes absolutely no sense. If you are going to sell something for $500, then say you will give $100 back after purchase, why not just make the product $400? Is it some sort of sleezy marketing scheme? ELI5. Please! Make this make sense.
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Another point that I haven’t seen mentioned is how beneficial it is to the retailer to seem like they are giving a high value item for a discount. It’s perceived as better due to the price, and an actual direct sale will cheapen the value in the perception of many people because people often think it was overpriced.
When someone sees an expensive item at 40 or 50 percent off there is often the thought of how much did it even cost them in the first place, this must have been way overpriced.
If the retailer can get as many different shopper types in, they stand to earn more money, and a rebate is how people get the idea of a sale but it doesn’t cost the store anything, monetarily or otherwise.
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