Mail-In Rebates

So if you keep up with the bargain circles you know that mail in rebates are growing in popularity. Newsweek had this fascinating article about this strange psychological phenomenon that happens with them. People are more inclined to buy products with rebates. But then after they actually buy them, tons of people don’t send the rebates in. The explanation they give is that people use different metrics in the store and at home. In the store, they consider the rebate when looking at the product price. Makes them buy it. At home, they weigh the value of the rebate against the hassle of having to send it in. And they decide it’s not with the trouble. Interesting phenomenon.

Here’s another weird thing. People are more inclined to buy a $35 product with a $5 rebate than a similar product that costs $30. The psychological explanation is, people see the higher priced item (before rebate) as being of higher quality, so if the net price is the same, they’ll choose the perceived higher quality item.

So it’s a win-win for sellers. Have a mail-in rebate, and consumers are more likely to buy your product than the similarly (net) priced competition. And tons of people don’t even bother sending in the rebate. Win-win. Sucks for us consumers though.