How does mail-in rebate works? If I buy a $100 product with $20 rebate, I get $20 after 2 or 3 months. What does the company do with that amount in 2 or 3 months? Also, some mail-in rebate benefits you; that the product you have bought is not just free but also you make some money on buying that product. How does that work? Like for example here: http://www.cellularchoices.net/tmobileclean.html
In this case, its simple. You are gonna pay them every month for your calling plan. T-Mobile probably bought the phones in bulk and are offering them as an incentive so you sign up for their service, and pay them $39.99 per month for cellphone service.
At one time some ISP's were offering mail-in rebates on low end computers to fully reimburse you for the price of the computer, as long as you enter into a contract to get their internet services for 1-2 years. Same principle.
However, mail-in rebates don't always work by making you pay in the future. Many times, the mail-in rebates is just a way to make the pricing more attractive and move items that are not really selling. The advantage of mail-in rebate as opposed to downright price reduction is that the seller retains your money for 8-10 weeks, which when you multiply with the number of people who bought the product can be very substantial amount from an interest-earning and cash flow viewpoint. In addition, the seller gets your address and phone number, which allows them build their customer database and to send you future advertisements and hope to get more future sales. In many cases, the seller may just sell their customer database to outside vendors and make more money.
Thanks for the explanation bro.
to add it's a useful tool for companies to solve temporary cashflow problems which is why you may sometimes see them being offered on hot sellings items too..
Another incentive for companies to offer mail-in-rebate rather than instant savings is that most customers tend to either forget or get lazy in mailing in the rebate form & receipt after the purchase.
The price looks attractive with M.I.R, but what good is it if you don't use it and end up paying the full price.