Rebate definition
/What is a Rebate?
A rebate is a payment back to a buyer of a portion of the full purchase price of a good or service. This payment is typically triggered by the cumulative amount of purchases made within a certain period of time. Rebates are generally designed to increase the volume of purchases made by customers.
Example of a Rebate
As an example of a rebate, a seller offers a 10% volume discount to a buyer if the buyer purchases at least 10,000 units within one year. The rebate is not paid until 10,000 units have been ordered by and shipped to the buyer. Another example of a rebate is when a buyer uses a coupon associated with a marketing promotion, requiring the buyer to mail the coupon and a sales receipt to a processing center, which later mails a rebate back to the buyer. Yet another example is when a car manufacturer offers a rebate when a buyer purchases one of its vehicles during a designated rebate period.
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Advantages of Rebates
There are several advantages to using rebates. One is that they can be used to trigger jumps in sales during periods when sales might otherwise flag. Another advantage is that they can be targeted at selling off products that might otherwise be at risk of becoming obsolete. Yet another advantage is that they can be used to retain customer loyalty, by keeping customers engaged with the seller over an extended period of time.