Re: [Leica] Rebates

[John Coan <jcoan@alumni.duke.edu>]

Bryan and Craig,

thanks for the well thought out replies.  I think Craig hit it on the head....
they are deliberately made a hassle to keep the percentage of pay out at a
third.  Wow.

I wonder if I should start offering rebates when I occassionally sell something
on Ebay?  The purchaser has to first pay me, get the stuff shipped, then return
to me ... let's see ... the ending email notice from Ebay, the cancelled stamp
on the shipping box, a printed rebate coupon (good for 30 days only) from my web
site (must be printed in color), and a chip of paint from the product just to
prove you are the real purchaser.  I have six months to send the money.

Just kidding.....

John

Bryan Caldwell wrote:

> John,
>
> >>I HATE rebates!  If you want to spur sales, why don't you just reduce the
> price?<<
>
> Because if a manufacturer simply reduces the suggested list price (and
> therefore the wholesale price it charges dealers who order new stock), it
> will face a virtual mutiny from dealers who have stock for which they paid
> the old (higher) price. By offering a rebate, the manufacturer effectively
> lowers the price to the consumer without directly affecting the wholesale
> price paid by dealers. Authorized dealers keep their profit margin, but,
> when offset by the rebate, the consumer pays a lower price.
>
> Consider the following. You are a widget dealer who sells widgets at
> $1,000.00 for which you pay a wholesale cost to the widget manufacturer of
> $500.00. Business is fairly good and you lay in a stock of quite a few
> widgets. Without any advance warning to you, the manufaturer drops the
> suggested list price to $800.00, making it impossible for you to sell yours
> at $1,000.00. Furthermore, because the list price has dropped, the wholesale
> price has dropped correspondingly, to $400.00. Now you have to sell your
> remaining stock (for which you paid $500.00 each) at $800.00 - a reduced
> profit margin. You're now competing with dealers who didn't have any in
> stock and can now order widgets at $400.00 each.
>
> By offering a rebate, the consumer feels like they're getting a better
> dealer and the manufacturer is not pulling the rug out from under its loyal
> dealers who have stocked up on equipment.
>
> Apologies to those who thought they'd left all this behind in Econ 101.
>
> Bryan
>
> ----- Original Message -----
> From: "John Coan" <jcoan@alumni.duke.edu>
> To: <leica-users@mejac.palo-alto.ca.us>
> Sent: Wednesday, June 07, 2000 10:21 AM
> Subject: Re: [Leica] Rebates
>
> > Craig,
> >
> > Can I editorialize here for just a minute?
> >
> > OK, thanks.
> >
> >  It is such a hassle to 1. Find the rebate certificate -- often in a rack
> in the
> > front of the store like Best Buy. 2. Send your original sales receipt.
> What if
> > you need it in the future? 3. Often deface the package to cut out the UPC
> > symbol.  4. Put all this in a envelope, spend postage money.  5.  Wait
> forever.
> > And if you didn't make a copy you have nothing to dispute not getting the
> > rebate.
> >
> > I HATE rebates!  If you want to spur sales, why don't you just reduce the
> > price?  Sure, I do them because I would be a fool not to.  But I still
> resent
> > having to jump through all these hoops to get a lower price when the
> purpose of
> > the price reduction is to move merchandise.
> >
> > John
> >
> > Craig Roberts wrote:
> >
> > > Dan wrote:  "...a nice way to get float on their money."
> > >
> > > True...but it may not be to Leitz's benefit.
> > >
> > > I'm the marketing manager at a high tech company which offers rebates to
> > > buyers of certain products.  We are constantly receiving customer
> complaints
> > > about delayed rebates.  Why?  Because our rebate funds are dispersed by
> a
> > > third party...as they are in many companies -- Leitz included,
> perhaps --
> > > and that's the source of problems.  We have switched rebate handlers
> three
> > > times with similar results.  We'd handle the rebates ourselves, but the
> > > processing is simply too unwieldy for an understaffed firm.  Maybe Leitz
> is
> > > in a similar situation.
> > >
> > > Craig
> > > Boston
> >