Monday, January 2, 2012

The Problem With Rebates

Once you remove this from a product package, to get a "rebate", you generally cannot return the product to the store for a refund.  This is by design, not by accident.

The best deals in life are the simplest ones.  I hand you a dollar, you give me a product.  Boom.  Done.  No ancillary side deals, nor rebates, coupons, promotions, or other distractions.  No free toasters - or free ponies.

And yet, many consumers are convinced that the way to get ahead in the world is to seek out these complicated deals.  They are looking for the "One Trick To The Tiny Belly" for the financial world.  Rather than diet or exercise, they want a secret pill that will melt fat away, figuratively speaking, except instead of fat, it is credit card debt.

So people engage in faux financial acumen, convinced that they are "smarter" than the average bear, because they are getting cash-back bonuses and frequent flyer miles.  And they tell themselves this, even as they walk up that wooden chute with the other cattle, and then have that startled look in their eyes as they are hung by their heels and dispatched with a captive-bolt gun.  Welcome to the abattoir.

Coupons, rewards, rebates, and the like are all just bait to get you to step into a trap.  When you see these things, you need to program your brain to not say "Whee!  A Bargain!" but instead, "What's the Catch, here, because there is always a Catch!"

Rebates are a case in point and are an annoying pain-in-the-ass.  Anyone with half a brain would understand these are a gag.  Why offer a "$5 rebate" on a product when you could just discount the price by five dollars?  And the answers are myriad and many.  But in addition to all that psychology they are using against your poor, defenseless brain, there are also practical setbacks to these rebate schemes.

The other day,  I was buying wine at the wholesale club.  The bargain presented was thus:  "Bottle of wine, price $9.99, but buy two and get an instant rebate of $4!"   Of course, the real bargain being offered was, "Bottle of wine, $7.99" - but that doesn't sound as sexy as an "instant rebate" - does it?

And of course, it is not a "rebate" but a coupon which merely discounts the price at the register.  Whatever the mechanics of rebates and coupons or discounts or promotions are, you should always reduce them to how they affect you, the consumer, by merely altering the price.

But by putting a cardboard sleeve on the neck of the bottle, they caught my eye, as the word "rebate" and "bargain" register with the human psyche and we are naturally drawn to what we perceive to be bargains, even if they are just OK deals.  After all, there are a lot of $7.99 bottles of wine out there in the marketplace.

Now, some consumers are lured into the argument that retailers offer these deals to "get you to try" the product, so that you will be brand-loyal, and thus come back the next week and pay 2-3 times for the product as you did before.  I think this is hogwash - utter hogwash.  If I am the type of person who buys generic laundry soap, giving me a 50-cents off coupon for Tide might get me to buy one box of it - if it is cheaper than the generic soap as a result.   But, at least for me, if the coupon is no longer available, I am not going back to Tide next week.  Laundry detergent is laundry detergent, despite what they say on the TeeVee.   The idea that I can be "induced" to being "brand loyal" is nonsense - they just want me to buy that one box of detergent, on which they still make a profit.

Rebates are particularly problematic for a number of reasons.    They are used by retailers to move product, as the word "Rebate" has a high-index and, as noted above, grabs the consumer's attention.  The rebate psychology gets the consumer to believe they are getting something of value, for less money.

For example, you go to buy a laptop computer at the store.  They have an array of laptops, arranged, usually, from cheapest to most expensive, in a row.  And generally, the most expensive have better displays, more memory, faster processors, and larger hard drives.  So, in most cases, you make your selection based on how much computer you can afford for your needs.

Computers today are a pretty fungible commodity.  You may have a brand preference, based on perceived quality and also history of the marque. For example, HP has suffered a black eye, in its laptop business, as the Nvidia video chips would tend to overheat, as people took the term "laptop" literally and placed them in their laps, blocking off the air intakes.   Similarly, one might shy away from a brand perceived as "economy" or "cheap".  However, brand loyalty is fraught with peril these days, as brands once considered stellar, are bought out and used to repackage cheaper goods.

But, as you look at the laptops, you see that one of the more expensive models - one that perhaps you dismissed as out of your price range, is touted as having a "$100 rebate!" which gets you to look at it a second time.  Now, if the laptop was merely priced $100 less, you still might be disinclined to buy it, as it still might be out of your price range.  But with the rebate, you might now think, "Gee, with the rebate, I can buy this laptop, which is a big upgrade from the one I was thinking of buying, and get an 'upscale' product for not a lot more than I was going to spend on the economy model!"

And of course, that is exactly what they were counting on.  So instead of the $320 Toshiba, you march off to the register with a $500 HP, which with the $100 mail-in rebate, will cost you $400, which you perceive to be a "bargain" until the Nvidia chip melts and you get very, very upset - but more about that, later.

And of course, $400 might not be a very good bargain to begin with.  It only seems to be a bargain when compared with the $500 list price.  It is the oldest game in the book - jacking up the nominal placeholder price, and then presenting the actual price not in absolute terms, but in relationship to the "markdown" from the fantasy price.  And a lot of people buy into this concept - telling you how much they saved and not how much they spent.  The "Markdown Monster" knocks 25% off the price of a used car!  What does that mean?  Absolutely nothing - if original "price" is as inflated as the blow-up display monster looming over the dealer showroom.

So, you get the computer home and unpack it and, in 50% of cases, forget about the mail-in-rebate entirely.   People are procrastinators, and the manufacturers and retailers count on that.  So you say, "I'll get to that later" and of course are so busy taking the kids to soccer practice and getting your daily Starbucks (with a coupon, of course!) that you let the mail-in-rebate thing languish.  Weeks later you realize you've left $100 on the table with this deal, and you desperately try to find the paperwork needed to get the rebate.  And you need a lot of paperwork.

Presuming you didn't miss the deadline for mailing it in (which trips up a lot of people) and you saved the receipt (ditto) and you saved the packaging (ditto again), you now need to cut the UPC barcode off the packaging as 'proof of purchase' to mail it in.

Now, they have you.

You see, once you mail in the original receipt and the UPC code, you can no longer return the product to the store for a full refund or replacement - and this is part and parcel of the game.  When the laptop overheats and melts the Nvidia card, you can't just take it back to the store for a refund or replacement, which is the easiest thing in the world to do.  Instead, you have to contact their warranty department, and often pack up the computer and mail it somewhere.   And let's hope you mailed in that warranty card, and saved a photocopy of your original receipt.

Why do they do this?  Because warranty returns are less expensive for the company than store returns.  Store returns negate a sale.  And that cuts down on sales.  And if the product broke, chances are, you will instead go back and buy a different brand (that $320 Toshiba is starting to look good!).  But with a warranty return, they get to "keep" the sale.   They fix the unit and mail it back to you, which is cheaper than taking back the product, refurbishing it, and then selling it for 50% off on Tiger Direct or some other discount outlet.

Of course, mailing it in (often at your expense) and getting it fixed and mailed back, can take months.  And if the product has a chronic design flaw, well, it will break again in short order.  Some bargain, eh?

Meanwhile, where is your rebate check?  Oh, that.   Chances are, you forgot about it, and if it never turns up, you will never notice.  And in many cases, these rebate checks can take months to process, for no apparent reason at all.  You are waiting three to six months for the rebate check, and in the meantime, paying interest on your credit card for the $500 computer that was supposed to be $400, which as $80 more than the one you originally wanted.  And in some cases, people never get their rebate checks at all.

And you know the drill by now, right?  You call customer service, wait an hour on hold, and they claim to have no record of your rebate request (you DID save copies of all the documentation, including the receipt, the application form, the UPC, and send it by certified mail, return receipt requested, right?).  Or if they do have a record of your request (or you force them to "find" it by mailing or faxing in, two or three times, the copies of the documentation) they say "Whoops! My Bad!  Computer error!" and promise to send out your rebate check "in the next batch" in 3-6 weeks.

Funny how, in this day and age, "computer errors" are still so common.

There are some companies that actually use a online rebate monitoring company, so you can log in and check the status of your rebates.  You know what?  That is just a tacit admission that rebates are an unholy hassle and a Pain In The Ass.

So, how do you avoid the trap of the rebate?  Get it out of your head that chasing coupons, rebates, cash-back, and flyer miles are examples of being smart about money.  Because they are just the opposite - they are bait used to get you to buy, to get you to step into a trap.  And only dumb animals step into baited traps.  Dumb animals and American consumers.

The best bargains present themselves - they don't need rebates or coupons or cash-back.  One reason the expensive laptop has a rebate coupon is that it isn't selling well - and that should tell you volumes about the quality and popularity of the computer.  Chasing after discounts and rebates and other so-called "bargains" is often an act of self-delusion.  You are getting no real bargains, but in fact are getting raw deals, wrapped in "bargain" wrapping paper.

Chrysler Corporation started this whole "rebate" thing the last time they went bankrupt and were bailed out by the U.S. Government (in 1979, not 2009) and started offering "rebates" on their poorly-made cars.  Rebate or not, you would have been better off buying a Toyota then, and the same is probably true today.  Don't let rebates distract you from the underlying deal.   And often, rebates, coupons, and discounts are not a sign of a good deal, but a horribly bad deal trying to disguise itself as a good one.

* * * 

NOTE:  Overheating is a big problem for all computers these days, as processors are more complex than ever and generate a lot of heat.  A typical computer has a main fan (sometimes two) a processor fan, and also a video processor fan.  For a desktop, clean the inlet and outlets by blowing with compressed air or vacuuming.   At least once or twice a year, remove the access cover and carefully blow dust off the video card and processor (and the whole works).  Be sure to disconnect the power, first.  Keep your computer tower ON your desk, not under it, to keep dust at bay.  For laptops, never run them on your lap or on a bedspread, tablecloth, etc., but on a flat surface.  A laptop stand can keep the computer off the surface and allow for better air circulation.

No comments:

Post a Comment

Sorry, Comments have been disabled due to the large amount of SPAM and TROLLING as well as GROOMING comments. Thanks for reading, though.

Note: Only a member of this blog may post a comment.