Before You Begin


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There are a lot of questions and misunderstandings that revolve around couponing.  I think it would be most appropriate before you go any further on this journey to understand a few basic axioms.  First, couponing will not cause a store nor a manufacturer to go bankrupt nor unexpectedly lose money. As you will see in the definition of a coupon, the manufacturers release their own coupons.  They also  reimburse the stores a flat .08 handling fee in most cases.  For coupons that have a face value of $1.00, that is 8% above the coupon value; for coupons that have a face value of .50, that is 16% above the coupons face value.  It is advantageous for the stores to accept these coupons because they are getting a much better rate of return on their coupons than if they were to invest their cash reserves in the free market.  In the case of a $1.00 with .08 handling fee, you can assume that the retail chain is reimbursed for coupons from the coupon clearing house at least monthly.  If that is the case and they are getting an 8% return for a 30 day float, the annualized rate of return on that money is 96%!!!  One would wonder why any store out there wouldn’t take a coupon, right?

From the manufacturer’s perspective, these coupons are part of their marketing campaign and they are specifically budget for.  They are well aware of what is out there.   Think about this:  How much money do you think Frito-Lay or Pepsi or Budweiser spends to run a small advertising spot during the Super Bowl?  How much do you think that people are paid to stand in stores and sample product all day on Saturdays?  The answer to both questions is a lot!  Here’s the catch, in both of those scenarios, they may or may not even get the product into your home.  In the case of TV ads, they can create brand awareness.  In the case of a sample, it may get something into your mouth in an effort for you to tempt you to purchase it, but in both instances, the money is invested on the front end with the hopes that you will buy.  With a coupon, the manufacturer bears some expense in the printing and distribution, but ultimately, they don’t pay the real money and reimbursement until AFTER you have already purchased the intended product.

What is the moral of this story?

Do not be ashamed to use coupons and do not let anyone make you feel guilty.  Coupons are a conscious decision that is made by the companies and stores involved and they are well aware of what they are doing.  If coupons were not good for businesses, how would the concept have perpetuated as long as it has?