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by david black on December 8th, 2005

david black

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How do companies make money selling items with full price mail-in rebates?

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  • by neoepiphany on December 15th, 2005

    neoepiphany

    They're making a wager. The companies are betting that a significant number of people will purchase the "free" product, and then either forget or decide it's not worth it to fill out the rebate information. That way, it's like they sold it to you for full price. They're also betting that a certain (probably high) percentage of customers will fail to fill out the forms absolutely perfectly, and then they can simply "disqualify" that rebate. In the end, while many people will buy the "free" product, only a few of these are likely to actually get their money back. While they do have to pay back a few people, since more people probably bought the "free" item than normally would have, they still make a tidy profit.

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