PVRblog On TiVo Rebates

This discussion on PVRblog regarding why Tivo uses rebates to sell its machines reveals something significant about consumer psychology.

As to the idea of just lowering the price rather than offering a rebate, rebates are used for a couple of reasons (by just about every consumer electronics company out there):

1. Not everybody claims them. The fact that only a certain number of people will complete the rebate paperwork is figured into the cost of a rebate. Lowering the price would have a much larger financial impact than a rebate, likely making it impractical.

2. Just having a rebate drives people to buy products. Lowering the price $100 does not have the same effect as having a $100 rebate. People buy more products when there is a rebate - regardless of if the final price would be the same either way.

One commenter remarked that the industry standard for rebate redemption is only 2%.