There are a lot of details regarding how coupons work that most consumers aren’t aware of. Many people are unclear as to how these companies make money. In order to understand where they come from, and how they make stores money while allowing people to save, here are a few answered questions that will help clear some things up.

How do Coupon Companies Make Money?

There are a number of different ways coupon companies make money. They can sell coupons in bulk (think coupon books) directly to consumers, offer ad placement services as well as sell ad space on their websites. Coupon distributors can also charge businesses enrolled in their program a fee for marketing their products. Additionally, these companies usually participate in affiliate programs that will allow them to direct internet traffic to their websites.

Do Stores Lose Money?

Have you ever wondered if the discount you receive when using a coupon translates into a loss of revenue for your grocery store? An article written for states, “You’ll be happy to know that your store doesn’t lose a dime when you use coupons. In fact, they make more money when you use coupons to save. The next time you’re clipping coupons, read the fine print on one. The text reads, “Manufacturer will reimburse retailer the face value of this coupon plus $0.08 handling fee.” Not only do stores get the entire value of the coupon back, they make an additional fee off each coupon used. It may not seem like much, but that money adds up quickly.

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Why do Manufacturers Offer Coupons that Give Shoppers Free Items?

What incentive do coupon companies have to essentially give away free product through coupons? The above mentioned article also states, “Manufacturers want shoppers to try their products. They work hard marketing a brand and enticing shoppers to try it. They hope that by offering a coupon you’ll try their product, realize that you can’t live without it, and continue to buy it on numerous occasions in the future. They’re trying to build brand loyalty and product awareness.”

How do Stores Benefit?

Stores benefit in a similar way that manufacturers do by giving out coupons. They are hoping to both increase foot traffic as well as entice buyers to shop their low prices. They are also hoping to give incentive to first time visitors of their store. The idea is that consumers associate their store with low prices and continue to shop there forever. People like to shop at the same grocery store. They crave the familiarity of knowing exactly where everything is. When consumers feel like their money has the potential to stretch farther in a particular store, they are more likely to be loyal to that establishment.

Understanding how coupon companies stay in business and how they help local stores is valuable information. Learning more about what coupons provide to local businesses can help you decide whether you want to participate in the process.

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