Difference Between Rebate and Discount

Rebate vs Discount
 

Discounts and rebates are similar to one another in that they both result in the customer paying a price that is less than the listed price for the product or service. The main difference between the two is the time period in which the price reduction is provided. While discounts will be offered at the time the purchase is made, rebates will be offered later on. The article offers a comprehensive explanation on discounts and rebates and highlights the main similarities and differences between the two.

Discount

Discounts are reductions in prices that are provided to customers for a number of different reasons. Sales discounts are price reductions that are granted at the time that goods are purchased. For example, a customer receives a 10% discount on a TV that costs $500 and will pay just $450 when purchasing the TV. Discounts are also provided to business customers that pay for the services or goods provided within a specific period of time. For example, a business may offer its clients a 5% discount if they pay within 30 days, a 10% discount if they pay within 14 days and 15% if the payment is made within 5 days of purchase.

A discount is usually given to a customer to motivate them in some way. A sales discount will usually motivate a customer to purchase a product or to purchase a higher quantity. An early payment discount motivates customers to pay early which will thereby reduce problems faced by firms from having their funds tied up.

Rebate

A rebate is a reduction in price which is provided after the full payment has been made for the product or service purchased. In simpler terms, rebates are discounts that are offered on purchases that were completed in the past. In this situation, the customer will pay the full price and the retailer will hand them some form of documentation that needs to be filled and sent in. Once this step has been completed the retailer will refund a certain amount from the full amount paid. Rebates are usually offered with utility bills and taxes. Rebates on taxes will be offered only if the tax payer has paid more than the actual amount that needs to be paid.

What is the difference between Rebate and Discount?

Discounts and rebates are both beneficial to consumers since they reduce the amount that is paid for purchases. A discount is a reduction in price that will be available to a customer as soon as the purchase is made. A rebate is essentially a discount that is offered for a purchase that has already been made. The customer will pay the total bill amount at the time of purchase, and once all documents and forms have been submitted to the retailer, a portion of the total amount will be refunded. Another major difference between the two is that the customer will be certain of the discount that they obtain since this amount is reduced from the price at the point of sale. However, the price reduction from a rebate is not certain as a retailer may refuse to make a refund later on.

Summary:

Rebate vs Discount

• Discounts and rebates are similar to one another in that they both result in the customer paying a price that is less than the listed price for the product or service.

• Discounts are reductions in prices that are provided to customers for a number of different reasons.

• A rebate is a reduction in price which is provided after the full payment has been made for the product or service purchased.

• Discount is offered to a customer at the point of sale, whereas rebate is offered for a purchase that has already been made.