Is there any difference between Rebate and Discount ?

Although discounts and rebates are both forms for reducing the total amount paid,

they differer in the way of do it.

Discount/Remise is a reduction of price on a specific product item(s).

Rebate/Rabais A least there are4 common incentive rebates types 

Volume Rebates

Volume rebates are the simplest rebate and are designed to limit customer gaming and over-promising. Instead of quoting a price driven largely by the customer’s “intended,” or “promised” volume, the seller responds with tiered pricing where the Invoice Price is fixed, but the actual price varies with volume and the difference is granted by rebate.

Example: In response to a customer inquiry, the seller quotes these volume/price combinations.

The example follows a simple story where:

- Quantity refers to the quantity of each order, rather than the cumulative quantity.

- And the quoted price is not the invoice price, but the price, net of rebates.

- In all cases, the supplier will invoice the customer at $100 per part

- Time period is a calendar quarter

Then, at the end of the agreed time period, supplier will measure the customer’s actual purchases and issue a rebate equivalent to the calculation based on volume depicted in the table below.

Growth Rebates

Growth rebates are a simple variation of volume rebates, Growth rebates, designed to drive revenue or volume growth in a particular product family, are like volume rebates with one condition: that the rebate is paid on incremental volume, rather than on all revenue or total volume. Growth is effectively a condition attached to a volume rebate.

Retention Rebates

Retention rebates are rebates paid to reward continued business, or customer loyalty. Retention rebates can be rebates of any form, volume, mix, growth, but are usually end of year or “cliff” rebates, paid upon realization of a condition. Example: purchase from Company A every month in2010 and receive the following rebate at the end of the year. Similarly, rebates can be used to smooth volume, by giving customers with “lumpy” consumption a financial incentive to smooth purchases.

Mix Rebates

Mix rebates are a best practice, designed to help improve the customer and product mix of a supply relationship. A seller uses mix rebates to encourage a distributor to sell more volume of higher mix, or margin, products, or sell more to selected end-users or end-user segments. Rebates should rarely be a constant percentage, for example,2% on all revenue. A constant percentage risks misinterpretation as a discount. Paying different rebate rates or amounts on different product families and segments allows the seller to use rebates as a strategic lever and drive improvements to product mix.

Mix rebates may be used with end-users, and absolutely should be used with distributors and buying groups.

The term conditional rebates refers to any rebate type coupled with a set of conditions.

Examples:

a) $2 rebate per chipset on all volume above2 million units, paid if and only if handset ASP > $100b)2.2% rebate paid on all volume subject to maintaining customer share of wallet >=  60%

Discount is a direct reduction of the price.

Rebate is a reduction in the price by refunding this reduction after the sales is done and usually after making the customer do something to get the rebate (many companies now use a registration form to get the discount refunded). The most important advantage of such a discount is that it can be used as a tool to collect information about customers for future marketing purposes. Also, statistics has shown that not more than73% of the customers make really use of this action, others do not register for the rebate although it was one reasons for buying the product.

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.

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 a10% 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 a5% discount if they pay within30 days, a10% discount if they pay within14 days and15% if the payment is made within5 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.