Have you ever wondered how stores get reimbursed for coupons?

Here is a quick explanation of the process of coupon reimbursement.

When stores offer a discount or rebate with a coupon, they give up some of their profit to gain customers and increase business. Stores have to pay out money from their own pockets when they offer coupons because these discounts reduce the amount that customers would have spent without them.

 

Stores can charge more for items before offering a discount or rebate through coupons to recoup this expense.

If the customer does not spend enough during one visit, the store will be able to make back what was lost by charging an inflated price in other ways like having higher prices on other products in-store or collecting more money for shipping costs.

The process of coupon reimbursement can be complex because it depends on how much the store is reimbursed by the manufacturer that issued the coupons, which varies depending on what type of coupon was used.

 

Some manufacturers reimburse stores at a percentage off, while others only give them full credit if they accept all types of their coupons and have a large enough customer base.

In some cases, stores can be reimbursed for coupons at full value, but this only happens when the store sells items on clearance or have been discontinued by the manufacturer.

The Simple Answer: No! stores make money on coupons! Here’s a longer explanation of how grocery stores don’t lose money.

If you are a regular reader of our website, You may have noticed a lot of coupons advertised to save money each week! We here in Canada may not see Huge amounts of Free Product Coupons – but we do see some great coupons to save money.

Each coupon has a Redemption date:

redemption address and date found on a back of a coupon

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 do stores get reimbursed for coupons?

Have you ever wondered how stores get reimbursed for coupons? Here is a quick explanation of the process of coupon reimbursement. When stores offer a discount or rebate with a coupon, they give up some of their profit to gain customers and increase business. Stores have to pay out money from their own pockets when they offer coupons because these discounts reduce the amount that customers would have spent without them. Stores can charge more for items before offering a discount or rebate through coupons to recoup this expense. If the customer does not spend enough during one visit, the store will be able to make back what was lost by charging an inflated price in other ways, like having higher prices.

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 your grocery store. Most grocery stores accept coupons to be used as part of transactions and are primarily treated like “Cash.”

Stores have a different date to get their coupons into the Redemption center, Most grocery retailers will send them to their head office, and from there, it goes to a publishing house, where it’s sorted and then paid out back to the stores.

The Stores get Paid to take in Your coupons!

Yes, that was not a printing error! Brands that want their coupons to be used are willing to pay each store a “processing fee” on each coupon redeemed from a customer.

The process of coupon reimbursement can be complex because it depends on how much the store is reimbursed by the manufacturer that issued the coupons, which varies depending on what type of coupon was used. Some manufacturers reimburse stores at a percentage off, while others only give them full credit if they accept all types of their coupons and have a large enough customer base. In some cases, stores can be reimbursed for coupons at full value, but this only happens when the store sells items on clearance or have been discontinued by the manufacturer.

On average, a grocery store makes 15% profit from its sales, and it’s estimated they get back 25 to 30 percent of their money through reimbursement costs.

Check out the coupon you see: “Plus a special Handling fee,” or you may see a set price of, for example, 10 cents.

Now you know what that means when you see that on a coupon.

Did you catch that?

TEN cents is the maximum amount that any store may receive for the coupon. Not only does the business get back the entire value of the coupon, but it also receives a payment from the product manufacturer of up to 10 cents per redeemed coupon. TEN cents may not appear to be much money, but if I bring ten coupons into the grocery store

Will Stores Lose Money on Free Product Coupons?

Answer: No.

Free product coupons are the best type of coupon for stores to accept. They do not cost stores any money because they receive their reimbursement even if there is no purchase associated with the redemption of the free item.

These types of coupons are also called “extreme couponing” or “manufacturer’s coupons.” These coupons allow you to get your money back when you buy something essentially, so it’s a win-win for both the store and yourself.

These free product coupons are often found in newspapers or online coupons sent directly to your house. They have a much lower redemption rate than other coupons because most shoppers do not know how they work, but that does not mean stores will ever refuse them.

Coupons most likely were not created for this purpose, but they have turned out to be an excellent benefit for both grocery stores and customers who want to save money when shopping!

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 savvy shopper, your store is still being paid for them….just not by your pocket

The Coupon Process

What happens to the coupon when the cashier takes the coupon:

After the cashier processes your coupon and puts it in a cash drawer, all of the coupons are added up as if they were cash at the end of the day. 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 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. The manufacturer pays the clearinghouse for all coupons sent. For example, if a store has $100 worth of coupons to process and reimburse on their account with the manufacturer, then that is what they will receive per transaction (minus any fees).

Why do manufacturers offer coupons that can give shoppers items for free?

Manufacturers 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. It’s a win-win for all involved – you get a fantastic deal, the manufacturer gets free advertising in return.

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.

I’m not an expert in this field, but I have done some research on it. Coupons are a huge marketing tool for manufacturers to get people to try their brand of product – which is why coupons are distributed by the millions every year. Manufacturers hope you will love their products so much that you’ll continue buying them in the future.

  • Manufacturers spend tons of cash to establish a 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.
  • Manufacturers lose money when you only buy one product; they want your brand loyalty and try their products in hopes that you love them and keep coming back for more!

Coupons are simply part of their Preplanned Budget.

There is a Pre-determined amount of money they want to spend on marketing and advertising, so if their ad budget includes coupons as part of the campaign – then that’s what it costs them.

Coupons are an investment in future sales for manufactures. That’s how manufacturers look at giving away products via coupon redemption.

Coupon Statistics

Some accountants and statistics have calculated how much of a percentage will be used out of the thousands of coupons that are printed and handed out across the country.

Coupons are not profitable to the manufacturers; they hope you will love their products so that your brand loyalty is strong enough for future sales.

Some statistics are High such as 90% of coupons get thrown in the trash!

It’s hard to believe so many potential savings get trashed into the recycle bin.