Irrational

I often criticize irrational behavior, so I feel must confess to such behavior of my own.  I was considering purchase of some software that was $89.99 plus a $20 mail-in rebate, for a net of $69.99.  I probably would have been willing to pay the $89.99, but the rebate scared me off.  Why?  Because I know from past experience I would probably fail to do all the rebate paperwork (they count on this, which is why they offer rebates rather than discounts).  I would therefore feel guilty that I lost out on $20.  The package of $89.99 for the software was fine, but $89.99 for the software plus guilt was too high.

  • I'm not sure that's entirely irrational - I'm not sure the trade-off would be the same for me, but the "guilt" (more like irritation) would be there nonetheless.

    Effectively, by implying that your time and attention are worth a mere $20, that you would submit yourself to their rigmarole for the petty cash, they are offering you an insult - even if they are gambling the insult is unjustified.

  • 00-Chucko

    Roar,

    By your own admition you didn't buy the software because the costs exceeded the benefits. That's practically the definition of rationality, at least in economics. The mistake so often made it to not count costs that are non-monetary. Seriously, think of the last time a study showed irrational behavior from and individual, re-read it if necessary, and you'll find the study discount's non-monetary things like "gee that makes me feel good."

    Caveat: I said individual behavior. Irrational voter "stuff" talks about groups.

  • DrTorch

    It's not just people don't fill out paperwork...it's that they often reject the rebate applications even when they are filled out correctly. Who has the time to argue the point that your proof-of-purchase most certainly was in the envelope?

    If nothing else, you voted (with your dollars) for a more appropriate manner of doing business, such as an instant, in-store rebate.

  • Russ R.

    Why not buy the software and give the rebate coupon to your kid to mail in.

    You get the software plus no guilt; your kid gets the benefit of $20 and early lessons on both paperwork and patience.

  • Oh, Coyote. I enjoy your blog and your rationality but, dude, you must be a real chore to live with at times. Give ideas like that offered by Russ a try now and then. Yeesh!

  • ben

    I don't think it's irrational. It's just that the model of what is going on is not obvious.

    Healthists use that little trick all the time to justify, well, absolutely anything.

  • Dr. T

    Warren Meyer's behavior was illogical (but perhaps not irrational). If he was willing to pay $90 for the software, then refusing to buy it because he might not meet the nitpicking requirements of the $20 rebate is illogical. The logical choice is to buy the software and examine the rebate requirements. If they are onerous, then don't bother with the rebate. If they aren't too bad, then submit the rebate, and, if a check comes in 6-12 weeks, treat it like found money.

    I despise mail-in rebate programs and want to discourage their use. My method for discouraging rebates is to carefully fulfill every rebate requirement, copy the completed rebate form and attached documents, note the expected date for the rebate, and follow up by phone or mail if the rebate doesn't come. I have never failed to get a rebate, though sometimes more than four months elapsed before it arrived. I do this for two reasons: to get what is owed to me but mostly to drive up the costs of rebate fulfillments for the sellers. I want EVERYBODY to do this so that mail-in rebates will be expensive, and the marketing people eventually get it through their thick heads that direct price cuts or "instant rebates" are preferable.

  • txjim

    Haha I do the same thing. I recently threw out two old rebate forms for some computer equipment I bought two years ago. They were the "must respond within 30 days" type. Needless to say I forgot about them until 31 days after the purchase. Those evil little rebate forms sat there in the bottom of the drawer, mocking me for my procrastination. I now have an irrational dislike for products from Sony and Western Digital.

  • You should get rid of the irrational by doing the following: Write to the software company and inform them of your choice. Perhaps your voice can cause a change. Right now they do not know they are losing business because of their tactics. Perhaps they would replace the $20 refund with a $5 reduced price as an effect. It is not irrational to not want to support a company that acts in a way that does not make you happy.

    I do not go to McDonald's because they ticked me off when they served kangaroo meat in third world nations back in the 1970s. I do not drink Coca-Cola brand beverages because they instigated the whole idea that only companies that offered Coke products exclusively got certain discounts. I stopped buying CDs when the companies chose to add invasive DRM measures on the CDs, to the point I had to reformat my hard drive in order to get rid of it. I do not buy Sony products because they have a habit of creating too many proprietary connectivity ports. I do not buy Apple products because they exude some kind of air of superiority. Is it irrational, maybe, then again, I doubt it.

  • The Dirty Mac

    I was supposed to get a rebate on a cell phone at the Verizon store. Rationally, I sent in the paperwork. The rebate was denied because apparently I made the purchase outside whatever date range the rebate was valid (nothing of this sort was told to me when I made the purchase). While it was worth it for me to send in the paperwork, fighting over it was not something I deemed to be not worth my effort. When the next great cell phone deal came along, I wanted no part of it.

  • IgotBupkis

    > it’s that they often reject the rebate applications even when they are filled out correctly.

    Indeed, I had a warranty once on and auto I'd bought (I was young and naive) and they rejected the reimbursement because the idiot mechanic had transposed two digits on the odometer reading. The date of the repair was AFTER the purchase date on the car and the inception of the warranty, but of course the odo was the "relevant" information. If they'd transposed two numbers on the date, THAT would have been the "relevant" information.

    I'd say I've gotten like 30% of the rebates I've applied for.

    My approach has long been that almost all of that crap is a complete scam. I usually won't bother to apply for a rebate unless it's more than 50 bucks, and usually figure the actual purchase price as the actual purchase price, ignoring any rebate. If I won't buy it at that price, I just won't buy it. If I get the rebate that way, it's gravy, like Dr. T suggests.

  • The package of $89.99 for the software was fine, but $89.99 for the software plus guilt was too high.

    But....did you Google said software title with the letters "OS" in front of it? I have found many many quality software titles in Open Source land that are equal in quality to their paid sisters.

  • I don't see anything irrational about it - you're "voting with your wallet" against a company whose practices annoy you. We all know the sad stories, hassles, inconveniences, and outright fraud associated with mail-in rebates. It's a stretch to consider it ethical behavior in product promotion. Even if it were ethical (snicker), the company is basically offering you $20 in a manner that will require more than $20 worth of your time to recapture, which in my mind is just one or two notches down from hiring somebody to stand in front of the display and shout obscenities at you as you consider your purchase.

    So you're being presented with a product from a company that's lying to you and / or insulting you and / or annoying you. And then you decide not to buy. Sounds perfectly reasonable to me.

  • Matt R

    That's funny. I would say the decision was rational, but made on the basis of irrational guilt. There are a million ways to make money, but we have limited time and energy to work. Filling out and mailing in a rebate form is just another way to make money. But deciding that the $20 is not worth the time and effort (especially considering the likelyhood of rejection) is no different from deciding not to open a lemonade stand. Will you feel guilty for not opening a lemonade stand tomorrow? After all, I bet you could make more than $20 if you opened it in the right place!

    All that said, you probably could have done all the requisite work in the time it took you to write this post. 😉

  • Fred

    Russ's advice . . just do it.

  • Daublin

    Yeah. You could simply pay the $90 and be happy, right? So why is this mentally hard to do? Why does the *option* make the offer look worse?

    I can suggest a rational reason. I never buy things with mail-in rebates. I don't care about the non-rebated price, and I don't even bother to evaluate it. I see mail-in rebate and keep moving.

    The problem is that it's a dishonorable business practice. There are many hidden costs of doing business with someone dishonorable. A good businessman will make sure that you are getting what you expect, that their advertising is accurate. A good businessman will make things good even when *you* have made a mistake. Mail-in rebates are the opposite. They tell you, right up front, that this businessman is trying to cheat you. They tell you that what appears on the face of the product is not what you are really getting.

    It's not impossible to do business with a sleazy organization. However, it's way more time and energy. You have to evaluate the terms extra carefully, and you have to consider your fallback options if something goes wrong. Americans are fortunate that, for consumer products, there are plenty of sellers we really can trust.

  • Rob

    After having being cheated by Adobe I feel the same way.

  • Larry Geiger

    Yes, yes, yes. I don't buy anything that comes with a mail-in rebate. It's a deplorable practice and many fall for it. Keep up the good work. Go buy a competitor's product. One of the main rebate pushers in our area was Circuit City. Look how good it was for them!

    Also, add up for a year or two, the cost of all of the extended warranties that you are offered for tools, appliances, tires, etc. Sometimes it seems cheap for one item but it can add up to hundreds of dollars every year. You will never spend the insurance value of all of those warranties. So don't buy them, just fix or replace things when they break. In the long run, most people will spend less.

  • John

    I have a great savings plan; I don't buy stuff that come with rebates, I don't buy at stores that require "loyalty" cards to get the advertised price, I don't buy anything "Made in China" that uses electricity or that you put in your body, and after all that if I get to the checkout register and the clerk tries to sell me a warranty I thank him for warning me that the product is no good and walk away.
    If it wasn't for farm stands and thrift shops I'd starve to death or die of exposure.

    But boy, am I saving money!