Do Stores Lose Money on Coupons?
The Simple Answer: No! They make money! Here’s a longer explanation of how grocery stores don’t lose money.
If you feel guilty for saving money – Please Stop!
If your a regular reader on our website, You may have noticed a lot of coupons advertised to save money each week! Us here Canada may not see Huge amounts of Free Product Coupons – but we do see some great coupons to save money.
Once you begin Couponing, You will start to love the thrill of saving money, and it can be contagious to see how much you can save! Especially if you can combine Coupons and a start a Price Book
Each coupon has a Redemption date:
If you look closely at the coupon above, you can see the Redemption Mailing address for the store to “Redeem” the coupon in the sense you just did at the store.
Most grocery stores accept coupons to be used as part of the transaction and are primarily treated like “Cash.”
How does the store get their money back?
The store has a certain amount of time to redeem their coupons for payment from the “Brand” or company that issued the coupon.
The Stores get Paid to take in Your coupons! Yes, that was not a printing error! Brands that want their coupons to be used – and they are willing to pay each store a “processing fee” on each coupon that is redeemed from a customer.
Check out the coupon you see: “Plus a special Handling fee,” or you may see a set price of, for example, 10 cents.
Did you catch that?
Not only does the store get back the coupon’s entire worth, but they will receive from the product manufacturer a payment of up to 10 cents per coupon that is redeemed. TEN cents may not seem like a lot of money to be worth the hassle, but if I take ten coupons into the grocery store this week, the store will make an extra $1.00 for me to save money! It’s a Win-Win for everyone involved.
Will Stores Lose Money on Free Product Coupons?
Regardless of the coupon value, it’s still a coupon – the stores will recover the amount of the coupon value PLUS their ” processing fee.”
Even if you combine a Sale and a Coupon and get the product for “FREE” or one heck of a steal of a deal – The store will NOT lose money
Rest assured, even though you walk out of the store with “FREE STUFF” from couponing and being a smart shopper, your store is still being paid for them….just not by your pocket
The Coupon Process
After the cashier processes your coupon, and puts the coupon in a cash drawer, at the end of the day, all of the coupons get added up as if it was cash. The coupons are all put into a plastic carrier bag and are sent to the store’s Corporate Headquarters
Once at Headquarters, there is a person who is in charge of processing the coupons by the store, and then the coupons are eventually sent to a clearinghouse.
Once at the clearinghouse, the work begins, as millions of coupons need to be sorted by hand. Once sorted, the clearinghouse sends all the sorted coupons with an invoice to the manufacturer.
Why do manufacturers offer coupons that can give shoppers items for free?
Manufacturers simply want shoppers to try their products! Lots of effort goes into marketing a brand, and they want to entice you as the shopper to try their product. They hope by giving you a great offer in the form of a coupon, you’ll try their product, and you will tell all your friends, and everyone will buy it in the future
The long-term goal is to build brand loyalty and product awareness.
Do manufacturers lose money when people use coupons?
Actually, yes, they do indeed. Maybe not the word “LOSE,” but it does cost them money to market the coupon and pay the processing for each store that sells the product.
Manufacturers spend tons of cash just to establish a new brand or new product line or only as of the original packaging
Manufacturers also have to continue to entice their loyal consumers. They need to make their consumers aware of new varieties, and to make sure they keep up with some of the competition.
Coupons are simply part of their Preplanned Budget.
Some accountants and statistics people have it calculated on how much of a percentage will be used out of the thousands of coupons that are printed and handed out across the country.
Some statistics are High such as 90% of coupons get thrown in the trash!
It’s hard to believe so much potentials savings simply get trashed into the recycle bin.