One of the reasons that cheap PCs and other equipment are not quite as cheap as they seem is mail-in rebates. I have always hated these rebates, as I am sure many people do. And yet, many people act like they are a great thing, or at least will go along with the idea that the rebate actually lowers the price. But I think it’s no secret that rebates are actually designed to keep the consumer’s money.

I think it was back in the 90’s when I first dealt with this, and my experience varied little from the cartoon version above. The rebate form required that you keep every scrap of paper associated with the item, and fill in an inordinate amount of information that would make a spammer drool. That is assuming that you can figure out the information and do it correctly. Then you get to mail in the form, hope it is accepted, and at that, wait a few months (or longer–the most common complaint is that the rebates takes too long to arrive) before the long-awaited rebate check arrives–one which is somewhat hard to cash, if I recall correctly. Some rebates don’t even pay by check–they issue you a debit card which can only be used at certain stores. Usually these details are not evident unless you read the fine print, which no one ever does.

Finally, there is the time/effort cost: how much is it worth to you to take the trouble of filling out all those forms, mailing things in, dealing with potential snags, keeping tabs on the rebate coming back, and then doing what is necessary to claim the cash in the end? Before getting excited about a rebate-discounted price, ask yourself if you would be just as excited if you had to do all that work before the purchase? You have two items, one is $299, the other is $230 after a $100 rebate. But before you can walk home with the cheaper item, you have to sort through papers, fill out forms, go to the post office, go to the bank–an assorted variety of tedious tasks, even not including the months-long wait. Is it worth it?

The common reaction is to give up somewhere along the line–which is exactly the idea the manufacturer had in mind. Fact is, about 60% of all people who qualify for rebates don’t claim them.

The soon-to-be-released Palm Pre is playing this game. The price you see for their 8GB model is $199.99, after a $100 mail-in rebate. Apparently they could not get the price down to match the $199 8GB iPhone, so they priced it at $300 and tacked on the rebate. If the 60% rule about rebate claims holds true, Palm will be getting $260 per phone–and the remaining $40 will probably be covered by all the detailed marketing information they’ll get from the people who do fill in and submit the rebate forms. Good deal for them, not so great for buyers who don’t think about the rebate drawbacks before buying.

If you’re hot for the Pre, then get it at Best Buy or Radio Shack, which claim that they will honor the $100 rebate instantly. I’m not sure if they require cumbersome forms or not, but the ‘instant’ part sounds a lot better than the normal route.

Interestingly, Japan doesn’t do rebates, or at least I have never heard of one here. Sachi was puzzled by the concept and had not heard of it, either.

As for me, I have long considered any mail-in rebate as a scam and I do not buy anything that includes one–or if I do, I disregard the rebate and count the pre-rebate price as the real cost.