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What is a Rebate?

By Bethany Keene
Updated May 16, 2024
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A rebate is a form of price reduction or refund on a product that has already been purchased. It is commonly used as a sales promotion by many companies in order to encourage customers to make a purchase. There are typically two types of rebates used: an instate rebate, where the discount is taken immediately at the store register, or a mail-in rebate, or MIR, where the customer must fill out documentation, and mail it in order to receive their refund.

Rebates may be best illustrated with an example. This sales practice is extremely common in computer stores, so imagine that one is purchasing a computer. The computer is marked at $500, with a $200 mail-in rebate. If the customer chooses to purchase the computer, he or she will be responsible paying the full $500 purchase price at the register, then filling out the rebate form and mailing it back to the company. After that, the company will send the customer the $200 refund in the form of a check or, commonly, a gift card for the company store.

There are often a number of requirements that will need to be met in order for a customer to be eligible for the refund. Generally, he or she will need to mail in the original receipt, the original UPC cut from the box, and the completed form. All of this must be completed by a deadline, and must be filled out correctly, or the company can deny the rebate. This is beneficial to companies, because many customers will purchase items intending to receive a rebate, and will then either fill out the form incorrectly, or never remember to send it in, at which time the company will have been paid full price for the item.

It is easy to tell the difference between a sale prices and rebates in stores. Items that require rebates will always be clearly marked as the sale price "after the mail-in-rebate," whereas basic sale prices will not include the terminology. Instant rebates are just another way of saying sale prices, and is just a type of marketing; these discounts are taken off when the merchandise is paid for, and do not require the customer to mail anything in.

Keep in mind that once one has filled out a form to receive this type of refund, the company now has one's contact information. This may be used for telemarketing purposes or targeted advertising. In addition, most stores will not accept returns of merchandise if the UPC has been removed from the box. When shopping smart, however, rebates can be a great way to save money on purchases.

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