Computer shoppers need to brush up on their arithmetic skills–and not just to calculate how much processor speed their machines need. Rebates have become part of the retail landscape, and though they can lead to great deals, they can also be cumbersome and restrictive.
There are simple rebates for $40 or $50 off a computer peripheral such as a scanner. Buying a computer, printer and monitor from the same manufacturer can yield as much as $200 in rebates.
These days, some of the hottest rebates on a PC purchase are associated with Internet service. One program offers $400 cash back if the shopper also commits to Internet service at a fixed price for an extended period.
On personal computers priced as low as $399, that can mean a free PC.
Rebates have stimulated PC sales–and not just for the least expensive models. Laurie Bauer, a spokeswoman for the Best Buy consumer electronics chain, says customers are using rebates for a wide range of computers.
Rebates have also been a boon for new Internet subscriptions. Over the summer, America Online’s CompuServe 2000 service signed up 378,000 subscribers, largely through a rebate program.
At Dallas-based CompUSA Inc., the nation’s largest computer chain, spokeswoman Suzanne Shelton says “consumers have grown to expect” rebates. But as rebates have become more common, many buyers wonder whether the process has become unnecessarily complicated.
“What’s the whole deal with rebates anyway?” asks Scott Raymer, a chemical engineer from Tulsa. “Why can’t they just mark it down at the register?”
Manufacturers and retailers have several motives for favoring rebates over discounts. The biggest one is that in the end they don’t actually pay a lot of them.
They also like that rebates give manufacturers the option of lowering a price, then effectively raising it later when the cash-back offer expires.
The bottom line is that most buyers either don’t ask for their checks or fail to complete the process correctly. Only 20 percent of consumers actually collect rebates in the $50 range, says Cameron Duncan, a PC industry analyst in the market research firm ARS Inc.
Some consumers simply neglect to send in the forms.
And in the process of gathering receipts and filling out forms, Duncan says, “there’s always a point at which some people miss a step. And each person who misses a step gets no rebate.”
Clearly, rebate programs reward only consumers willing to put forth the effort, and companies gamble that many won’t.
“We would not be able to drop the price as low as we can with a rebate,” says Patrick Griffin, marketing manager for Presario, the line of consumer desktop PCs from Compaq Computer Corp.
Not surprisingly, the bigger the rebate, the higher the rate of participation, says David Goldstein, president of Channel Marketing Corp., a market research firm in Dallas. Nearly all PC buyers who qualify for the $400 Internet access rebates try to claim them, he says.
Also, when a retailer offers an instant rebate at the cash register–Best Buy’s discount on three years of Prodigy service, for example–all shoppers can take advantage of the savings right away.
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Some of the best deals are available to consumers piecing together a system with components all from one manufacturer and signing up for an Internet service provider, or ISP, at the same time.
“First-time buyers should take a serious look at the rebates available,” says Duncan of ARS.
Compaq says it tries to make the rebate process simple. There is a single form for the rebate on an all-Compaq system. Buyers are asked to put a check mark in the box for the rebate they qualify for.
Customers are required to cut out the appropriate bar code from the box of each product as proof of purchase for the specific model. Then they must mail in the form and the labels. Rebate requests not containing all specified information and documentation are not honored and are returned.
Compaq advises customers to carefully read all forms and to follow instructions, including adhering to deadlines.
They also need to read the fine print, says Goldstein of Channel Marketing. Some small businesses have been dismayed to find rebates limited to one per customer, he notes.
Also, manufacturers and retailers recommend that buyers keep good records.
“Make a copy of the rebate form so you know where you sent it and who to contact if you don’t receive money in a timely manner,” says Shelton of CompUSA.
The ISPs have their own rules.
For example, customers taking the $400 rebate are subject to a cancellation fee if they drop the service before their three-year commitment is over, says CompuServe 2000 spokeswoman Anne Bentley. CompuServe 2000’s penalty is $50 plus a pro-rated portion of the rebate.
The CompuServe 2000 rebate is being offered by major brands such as IBM, Hewlett-Packard, Compaq, Apple and E-Machines. It is also available through retailers including Circuit City, CompUSA and OfficeMax.