Dec 07, 2021

What Is a Rebate?


What exactly is a rebate?

The dictionary definition of a rebate is: “a return of part of the original payment for some service or merchandise; a partial refund.”

In effect, rebates are trade discounts that suppliers use primarily as incentives to encourage an increase in sales. They are sometimes referred to as supplier incentives, vendor incentives, channel incentives, special pricing agreements, bonuses and retroactive discounts.

Supplier rebates are distinct from upfront discounts, however, in the fact that they are paid retrospectively. Whereas discounts are applied at the point of sale – effectively reducing the price paid by the buyer – rebates are only issued once full payment has been made. In other words, a rebate is a partial refund of the cost of a product/service that serves to reduce its cost at a later date.


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