A coupon costs more than the discount printed on it. Handling, clearing and the sales it would have captured anyway all form part of the expense.
Funding determines who absorbs the discount
A store coupon is funded by the retailer and comes directly out of its margin on the sale. A manufacturer coupon is funded by the brand and reimbursed to the retailer afterwards.
The difference is invisible at the till but it governs which items can be couponed, how deeply and how often.
It also explains why manufacturer coupons carry precise product restrictions while store coupons tend to be broader.
Clearing costs sit on top of the face value
Manufacturer coupons pass through clearing houses that verify redemption and process reimbursement, and that service is paid for per coupon.
The retailer also receives a small handling allowance for accepting and processing them, which the manufacturer funds alongside the discount itself.
These per-coupon costs are modest individually and substantial across a national campaign, which is one reason paper coupons have declined in favour of digital ones.
Most redemptions are not incremental
A large share of coupons are used by shoppers who would have bought the product regardless, converting a full-price sale into a discounted one.
Campaigns are judged on incremental sales, meaning purchases that would not otherwise have happened, and the ratio between the two determines whether the promotion worked.
Targeting exists to improve that ratio, which is why coupons increasingly arrive through apps and loyalty accounts rather than in newspapers.
Coupons buy information as well as sales
A digital coupon tied to a loyalty account records who redeemed it, what else was in the basket and whether the shopper returned.
That data has value beyond the campaign, informing future pricing and range decisions in ways a paper coupon never could.
Manufacturers pay for access to some of it, which offsets part of the promotional cost and shifts the economics further toward digital distribution.
Why some brands avoid coupons entirely
Frequent discounting trains shoppers to wait, and a product that is regularly couponed becomes difficult to sell at its normal price.
Brands positioned on quality often refuse coupons for this reason and rely on sampling or bundling instead, which affect volume without touching the price signal.
The decision is strategic rather than financial, and it is why entire categories rarely carry coupons while neighbouring ones always do. Once a brand has taught shoppers to wait for a discount, returning to a stable price is far harder than leaving it there.