Rebate vs subsidy vs discount

Hi there,

This is indeed an interesting, very specific question, so I'm happy to give you my perspective on it:

There are actually two differentiators for the three expressions:

• Type of business: While you may find rebates and discounts as well in B2C business (PrepLounge discounts on coaching sessions being the most obvious example), you would not speak of a subsidy except for G2B (government to business) or sometimes B2B business.
• Moment of specification/ application: While discounts and subsidies are specified upfront, rebates might as well be specified just in the moment of purchase.

In case you want a more detailed discussion on the three expressions and the business context you are thinking about, please feel free to contact me directly.

I hope this helps,

Hagen

Rebate: Seller pays back any excess amount paid by the buyer. Seller nets the full sticker price.

Subsidy: Seller receives part payment from buyer and remainder of payment from a subsidising entity (e.g. government). Seller nets the full sticker price.

Discount: Seller accepts a lower payment than the sticker price from the buyer (and/or the subsidising entity). Seller nets the sticker price minus the discount.

Refund: Seller pays back full/part of the amount paid by the buyer (for any reason). Seller nets the sticker price minus the refund.

Hi there,

Just to add to the comments below, remember that subsidies are pretty much exclusively government-based. They are used to incentivize/encourage production of goods (like wheat, milk, etc.)

Rebates and discounts are much more applicable to case studies (i.e. selling products to consumers)

Let's say an item costs $100 to buy

Rebate: After you buy this item, I will give you back $20 back (now or at a later point)

Subsidy: I (or another 3rd party, e.g., the government), will give you $20 to help you purchase this item

Discount: I will sell you this item for $80 ($20 discount)

Overall, the effect is very similar for a customer looking to buy something. For rebate and subsidy, there are more complex applications. E.g., tax rebates (portion of tax being paid back) to corporates. E.g., subsidy provided to corporates to help finance investments in important industries (e.g., battery production for EVs)

Hope this helps! Feel free to message me directly for additional support