Why do companies use rebates?

Companies know that people will buy the product and then not send in the refund for many reasons including can't find the receipt, lost the form, threw away the proof of purchase that is needed for the refund or all three. This is called slippage and companies count on it to save thousands of dollars. I just spent 20 minutes before posting hunting down a receipt to mail in a rebate and I have been sending in rebates for over 30 years. This doesn't happen to me often, but I can completely understand how other people end up buying the product and misplacing something needed for the refund.

The most likely answer I can imagine is that if they offer a rebate instead of an instant discount, the customer may forget to send in the rebate form.

fI do believe that is the reason. They are hoping that you never send it in and then they are not out of the money.

they do it because it sounds good, calls people's attention to the product, but often people forget to use the rebate, so they're wining :) I tend not to buy things because they have a rebate - I end up forgetting about it, but a lot of people do look for products that have some sort of a rebate.

I'm not exactly sure why they do it, other than for the extra communication they will have with you. What ever the reason is, I sure like it when they do. :) I bought my mil a digital camera for christmas, but of course it needed a memory card to go with it. I did spend a little bit more for the card than I planned, but it was nice to see I would get a $15 rebate on it. When they contacted me about my $15 check, they offered me an upgraded rebate if I wanted to select from 3 different software titles. Considering they were all much pricier than $15, I happily selected a $30 program I was really interested in using! win-win for me lol While it was worth the extra effort to fill out a form & mail in copies of the receipt & UPC code, I much prefer the automatic rebates I've been earning from upromise.com :D

Initially the product is new to the market so they want to give adverstiment abut the product so they will rebate to that product so they easily get the customers and they sell their products easily.........

I agree with you. Why can't they just put it on sale and be done with it. Most of the time I have received my money back but it is a long and tedious process and it is hardly worth it. I think the companies hope you will forget about the rebate and never send it in.