What is Rebate? – What’s the Difference Between Rebates and Discount

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What is Rebate? When it comes to marketing, there are just so many terms. It gets complicated memorizing these terms sometimes. It is going to be more difficult if you are a beginner in all marketing.

Fir you become an expert in whatever marketing career you are going for, you need to take note of these terms and know how to apply it.

What is Rebate

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Because of the similarities, a lot of people often mistake rebates for discounts. There are good differences between rebates and discounts.

As a good marketer, before setting the prices for our sales, you need to consider the volume of sales you want to make, the profit you will make, and even the way your brand is perceived.

What is Rebate?

A rebate according to Wikipedia is a form of buying discount that is repaid through reduction, returns, or even paid retrospectively. This is a type of sales promotion that marketers use to lure customers.

It is used as a primary incentive or supplement to product sales. This is also a way of enticing customers that are price sensitive.

The most popular form of the rebate is the MIR (mail-in rebate). This mail-in rebate allows buyers to mail in a coupon, receipt, or even a barcode in order to receive a cheque for a particular amount.

Rebates usually depend on the product, time, and place of purchase. It could be an online store or a local store. Where ever you choose to get the product is ok as long as they offer rebates.

Rebates are usually offered by retailers or product manufacturers. Big stores often work with manufacturers which gives them the ability to offer rebates.

What is Discount?

A discount is a form of sale incentive that is applied at the point of purchase to reduce the buying price of whatever you are buying. After shopping, when you get the bill, you pay only the discounted value.

Discount is instant and very immediate. Discounts are always visible at the precise moment that the purchase is made or would have been made.

Rebates VS. Discount

When talking about rebates vs. discount, what are the differences? Well, we would be talking about that later on in this article.

Discount can be seen as a form of prepayment. For instance, when you get a 5% discount, you already paid 5% off the original price already.

If you can get a 100% discount, you’ll get the product for free. I hope you see the point I’m driving at now. Rebates are like a promise of a discount after continuously buying from one manufacturer or vendor.

What’s the Difference Between Rebates and Discount?

The differences between rebates and discounts would be listed in a tabular form under this paragraph.

Terms/Differences Discount Rebate
Definition A discount is a price reduction that is given to customers who make payments in large quantities or buy goods in large quantities. This is a retrospective payment used as an incentive to drive sales without reducing the quoted price but offering a discount.
Strategy It is a short-term strategy as its immediate. It is a long-term strategy.
Availability It is available to everyone. Only available to companies who meet certain criteria in the contract.
When is it Offered? Discounts are offered to each product bought by the manufacturer. Rebates are given as deductions In the list price if the required conditions are met.
Do you need a contract? There’s no need for a contract. Contracts are required.
Does It impact cash flow? Discounts has more impact on cash flow if bought in large quantities. When rebates are claimed, it can amount to millions of dollars a year which significantly boosts the bottom line.
How complex is it? Discounts are almost straightforward and anyone can understand it. Rebates can be complex sometimes which means you may need a rebate management system.
Who is the Regulator? Discounts are regulated by the ASA and trading standards. Rebates are regulated by the IFRS (Financial Reporting standards) or the local GAAP (Generally Accepted Accounting Principles).

Those are the differences between discounts and rebates. I hope you fully understand it now. If you think this article would be helpful to someone, kindly share it on your social media profiles using the sidebar provided.


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