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We've done rebates like this before. Here's how it works: The customer sees that the regular price is higher than the competition, so the product must be superior. They see that with the rebate, the price would be lower than the competition, so they buy the product. They enjoy the product, forget all about the rebate, and everyone is happy.
If you listen very carefully on a quiet night, you will hear a faint "Doh!", as someone finds a reciept for an expired rebate.
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