When does a cash-back saving start to matter to you?

[powerbuy]

Hi. We're launching an IT buyers group for small businesses in early 2009 and at the moment we're negotiating cash-back deals with some of the big IT brands.

Please tell me, how big does a saving need to be before you go to the effort of submitting a cash-back claim?

Would you need to save at least $100 (e.g. on a laptop or printer) or at least 20% of the value of the product value? Or will you apply for a cash-back no matter the value?

If you are the type of person who doesn't go for cash-back offers at all, please tell me why?

Thank you.

Joel Montgomery
PowerBuy

[KarenC]

Sometimes it's too hard to get the 'cash back'. Recently I helped two elderly pensioner relatives purchase separate IT items that had cash backs of $50 each. I had to do all the internet registration and cash backs for them - it was very confusing as the links were not easy to find, and if they did it on their own, they wouldn't have bothered.

[Julie MT]

Hi Joel,

I'm all for saving money when it comes to purchasing IT supplies.

I do admit though to being a little suspicious when it come to cash-back offers. I figure "there's no such thing as a free lunch" and wonder if the offer is just an advertising gimmick, similar to sales items heavily marked down from a heavily inflated original price.

Please tell me I'm wrong...and that these offers really do reflect bargain buying.

If there really are savings to be made then the idea of an IT Buyer's Group is an excellent one. I take it the cash-back offers would be possible due to high volume purchase power of members.

Of course, I'd love to see a 20% price cut...who wouldn't?

Using the example where a product originally cost $1,000:

20% would represent a saving of $200. Sounds great, but not sure if it would be attainable.

10% would come out at $100 and seems a tad miserly to me.

15% - $150 might just be the ticket - providing incentive to the purchaser without breaking the bank of the seller.

I'm a big fan of the win-win.

Hope my thoughts help and look forward to hearing how things develop.

Cheers,

Julie - MT

[Susan Oakes]

Cash backs are a good short term promotional tool, however as Karen pointed out it is sometimes not worth the hassle. If it is less then $50 I would not bother.

Instead of individual cash backs are you also looking at packaging up value buys with a range of IT products for the customers, giving them a discount.

[powerbuy]

Thank you so much for your feedback. What you're telling me makes a lot of sense.

I think a good cash-back program must:

a) offer true, incremental savings. Julie, I think you're right to be suspicious in some cases, but in others I notice that IT suppliers use cash-backs to genuinely move excess stock or to spike sales. They way I have designed my program is that any small business can buy from anywhere at the best price possible, and then come to me for an additional saving. So the saving is real.

b) be easy to use. Karen and Susan, some companies design their cash-back program to be difficult so they get low take-up rates. I think a good cash-back program is one that allows for an online claim submission and direct desposit into your bank account.

Julie, the model works such I save IT vendors on marketing costs and convert the $$ into cash-back savings, and I take a cut (5%-25% of the saving) along the way.

I appreciate all of your feedback on the saving threshholds. I will aim for minimum $100 and an average saving of 20% - see how I go! If you want to register at my site I will keep you posted!

[Susan Oakes]

Good luck Joel. It sounds like a great business idea and your website looks good.

Susan

[ahortin]

I think cash-back's can be good if the incentive is enough. I've seen some product cash-backs that convinced me to purchase the particular product over another and others that aren't worth the paper they're written on.

To be honest though, I think it kinda defeats the purpose if you have to "subscribe" or pay a fee to be able to receive those cash-backs. A bit like those "entertainment" books that are available around this time of the year, advertising 1000's of dollars worth of coupons. Most of the time you rarely use even a couple, whether it's because of the (lack of) savings or simply because you don't require the product.

[powerbuy]

Originally Posted by ahortin

To be honest though, I think it kinda defeats the purpose if you have to "subscribe" or pay a fee to be able to receive those cash-backs.

I appreciate your feedback, Anthony. What do you think if, instead of asking someone to subscribe first, I deduct the subscription fee from the first cash-back they claim? E.g. If I offer you $300 cash-back on 3 laptops, minus $70 subscription = you get $230 cash-back. That way there is no actual outlay and you don't have to give over your credit card details.

Thoughts?

[MissieK]

I don't like cash back offers - they tend to turn me off, especially when the advertised price is the post-cash back price. It means I have to initially pay more than the advertised price, then wait for the money back, often ages! I'd rather a discount up front.

Melissa

[ahortin]

Originally Posted by joel_montgomery

I appreciate your feedback, Anthony. What do you think if, instead of asking someone to subscribe first, I deduct the subscription fee from the first cash-back they claim? E.g. If I offer you $300 cash-back on 3 laptops, minus $70 subscription = you get $230 cash-back. That way there is no actual outlay and you don't have to give over your credit card details.

Thoughts?

I think that's sounds a better way to go. That way you'll only get charged if you use the 'service'. Personally, I think I'd be more inclined to use a service like that, than I would if I had to pay an upfront fee for something I may or may not get any benefit from.

Cheers,
Anthony.