Tuesday, January 17, 2017

Dubious Bargains

A few months ago I was in  Staples and saw they had 5 reams (a ream is 500 sheets) of printer paper on sale for $5.  I found the price irresistible so I bought a pack.  This is a good price but perhaps I should have passed.  I already had 2.5 reams on hand.  Since I use about 250 sheets a year this is a 5 year supply so I wasn't about to run out.  Furthermore the price wasn't really $5, it was $30.99 with a $25.99 rebate.  Since sales tax is charged on the price before the rebate the effective price was more like $6.70 (still a bargain of course).  And to get the rebate you had to apply (which fortunately you could do online) and then wait months to be mailed a prepaid debit card. Eventually I got an email saying my card was in the mail which seems unlikely as it took another 2 weeks or so to arrive.  But it finally came and it turned out to be simple enough to spend the balance at the place I usually buy lunch.  So things worked out but saving a few dollars probably wasn't worth the hassle.

It is also a little hard to understand how this benefits Staples.  Perhaps enough people fail to apply for or spend their rebates to make the deal profitable.  This seems a little unlikely but it would be interesting to know what the follow through rate is.  Or it could be some sort of promotion to get people comfortable with prepaid debit cards. However while the card was easy enough to use it doesn't seem to me to have any advantage over cash.   But at least the state of New Jersey came out ahead.

1 comment:

  1. Well there are 3-4 hurdles between purchase and redemption, and I suspect that the attrition rate is something most people would consider surprisingly high. And even those cards that *do* get used are used after a delay of x + months + y. I'm sure Staples has a lot of good data on this, and a pretty detailed model incorporating all relevant parameters (which they're constantly tweaking:-). All of which can be good news for people such as you who are good at following through.