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.
In: 40
Sales tax. In general banks will only lend up to the MSRP of vehicles or other high cost consumer items. But the out the door cost includes sales tax. In current America there’s many buyers who can’t afford to make an initial payment of even the cost of sales tax. So they raise MSRP and give cash back to pay sales tax. In reality they’re just financing the sales tax.
(Money back = rebate): An instant rebate is a marketing ad that works just like any sale price. A mail-in rebate relies on layers of inconvenience such that the percentage of consumers who actually end up having the rebate redeemed is somewhere like 20–68% (20% of all sales, but 68% if you consider only the consumers who likely only bought the product for the explicit intent of redeeming the rebate). ([WP: Rebate](https://en.wikipedia.org/wiki/Rebate_(marketing)#Types_of_rebates))
(Money back = rebate): An instant rebate is a marketing ad that works just like any sale price. A mail-in rebate relies on layers of inconvenience such that the percentage of consumers who actually end up having the rebate redeemed is somewhere like 20–68% (20% of all sales, but 68% if you consider only the consumers who likely only bought the product for the explicit intent of redeeming the rebate). ([WP: Rebate](https://en.wikipedia.org/wiki/Rebate_(marketing)#Types_of_rebates))
Also targeting a certain audience of savvy shoppers. They’re the ones lured into your shop this weekend after finding the cashback offer online, you’re happy to ‘lose’ $100 on their sale because it’s still a profit for you. Meanwhile a guy who has no interest in spending time hunting savings will walk in the same day and just pay normal MSRP, don’t want to interrupt his full price purchase by dropping the price or advertising the cashback too loudly.
Also targeting a certain audience of savvy shoppers. They’re the ones lured into your shop this weekend after finding the cashback offer online, you’re happy to ‘lose’ $100 on their sale because it’s still a profit for you. Meanwhile a guy who has no interest in spending time hunting savings will walk in the same day and just pay normal MSRP, don’t want to interrupt his full price purchase by dropping the price or advertising the cashback too loudly.
Also targeting a certain audience of savvy shoppers. They’re the ones lured into your shop this weekend after finding the cashback offer online, you’re happy to ‘lose’ $100 on their sale because it’s still a profit for you. Meanwhile a guy who has no interest in spending time hunting savings will walk in the same day and just pay normal MSRP, don’t want to interrupt his full price purchase by dropping the price or advertising the cashback too loudly.
Often these rebates are not instant. They comes weeks or months later, assuming the customer does the work to claim them. As a result, the company can also earn interest on that money for the duration before returning it, and it may have other impacts on their cash flow.
Often these rebates are not instant. They comes weeks or months later, assuming the customer does the work to claim them. As a result, the company can also earn interest on that money for the duration before returning it, and it may have other impacts on their cash flow.
Often these rebates are not instant. They comes weeks or months later, assuming the customer does the work to claim them. As a result, the company can also earn interest on that money for the duration before returning it, and it may have other impacts on their cash flow.
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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