During the turnaround time, the company can earn interest on the money.

If the turnaround time crosses into the next fiscal year or quarter, a rebate offer can inflate sales in the current period, and not have to be accounted for until the next period-and then it could be attributed as a cost reducing sales or expense for the next period giving companies an accounting advantage with their Wall Street projections.

Rebates can also be used to collect consumer information as it is required by most rebate forms for consumers to fill in personal or household information. This information can be used by producer or retailer to analyze consumer behavior.

Once the UPC has been removed from the box, retailers can refuse to accept a return of the item. The inability to return a product (and therefore lose its profit, however slim) is attractive to both retailer and manufacturer alike.

Not all buyers will meet the criteria to receive the rebate. Companies often require the original UPC barcode, receipt, and additional information, which a buyer may forget to include when redeeming the rebate. Companies almost always add other caveats to the rebate as well, such as the redemption having to be postmarked by a certain date. It works in the company's favor if buyers do not act quickly to redeem. However, a University of Florida study notes that shorter redemption periods actually increase the redemption rate in the consumer's favor because it gives them less time for procrastination to set in.

Not all customers will actually mail in the rebate coupons (in the case of a mail in rebate) and thus giving the manufacturer/retailer a higher profit.

Not all buyers remember to mail the coupons, a phenomenon known in the industry as breakage, or the shoebox effect. Though it can be used interchangeably with breakage [14] slippage is the phenomenon when a consumer has their rebate fulfilled but they lose or forget to cash the check. Some rebate companies could tout a higher "redemption rate" including the breakage, while not calculating the potential slippage of uncashed checks.

I too don't understand how things can be "free" after rebates. Oddly enough, I've never had a single problem so far with any of my rebates and I've bought from a variety of companies:

I'm probably on the lucky side of things.