discount Southwest gift cards at COSTCO

Went into COSTCO today and noticed a huge rack of Southwest Gift Cards.  $500 card for $450. 

Easy way to knock down your fare by 10%.

The one south of us?

Avon

Just curious, who takes the $50 hit?  The merchant?  Southwest?  Sounds like...hmmm.

Candy

There is no $50 hit if Southwest's costs are low enough. What does it cost to provide $500 retail worth of air transport? Based on what I understand to be the case for the airline industry, they operate at a 100 percent markup, meaning that that $500 ticket costs them $250. So they should be glad to sell it to people who wouldn't have flown them at all at full price. They would be un-thrilled to sell it to anyone who was prepared to pay full retail.

This raises the question of what CostCo paid for those cards. Probably some small fee, the cost of making and packaging the cards, rather than $500 or even $450. That way, they can simply destroy any unsold cards.

And the fact that they do deduct their own fee before they remit the balance to Southwest does suggest that Southwest is still making money even at the $450 price less what CostCo is charging them. So the best answer to your question is "no one." For every PJ who jumps on the deal, there's another customer who wouldn't have flown them at all without the gift card. And one of the latter pays for four of the former.

FYI - they also have Landry's gift cards for an even bigger discount.   $100 cards for $80.  You can use those to pay for your rooom, food  and other onsite charges at Golden Nugget.

Thinking more about it, some gift cards come with a set denomination, e.g. $500, while others at a range, say $50-500, and the buyer states the amount to the cashier to load, e.g. $100.  I personally like one denom card instead of a range.  I mostly buy them for actual gifts, and I'd rather not have to notate on a "range" type how much am giving the giftee (would I look like a cheapskate?  LOL).   But lately the majority of cards (any merchant, i.e. Burger King, Southwest, etc.) seem to be the denom range type.

Finally getting to my point, perhaps a flat $500 card is too steep a price for many folks, thus those high denom ones would 'sit' on the rack unpurchased, while a range denom card provides for choice/flexibility for more buyers/givers.  Or, given the recent scams involving gift cards (which I don't under stand how that works), perhaps the one high denom cards are preferred by scammers.

Actually, more to my question, does Walgreens or Walmart or CostCo, or Burger King or Southwest...who purchases the cards to sell at whatever denomination, and how is the transaction completed?  Does Walgreens get a cut of the amount (full price purchase) for selling it, like any other sale, or does Burger King? 

And therefore, for the $500 card discounted to $450, who made that decision?  CostCo or Southwest?  Were there other high denomination cards on sale for a discounted price?  Different questions.

Candy

Very unlikely that CostCo made that decision on their own. If they had paid Southwest some wholesale amount for a pre-loaded, fixed-denomination card--let's say that the $500 card cost them $400--then, one could easily imagine them putting the cards on sale, because maybe they weren't moving well. But that isn't the way it works. The retailer loads the card and sells it, then remits some percentage of the sale amount to the supplier.

The crucial distinction here is that CostCo isn't reselling a good it has purchased, like a pallet of 120 cans of tomato sauce. It's acting as an agent. Its profit on the transaction comes from taking a commission on the sale. So perhaps they've told Southwest, "When we sell this $500 card, you'll get $400, and we'll keep $100." And then CostCo could decide to sell them for $450 and keep only $50, remitting the same $400 to Southwest.

Would suppliers--Southwest, Burger King, whatever--object to their cards being sold at a discount? They shouldn't, if they're getting paid the same amounts regardless. In fact, they should be happy that the cards are being sold.

Its not real money for them.    When a vegas hotel comps your room they dont lose the $250 they normally sell it for.  They only lose what it costs them to clean the room after you leave.

Same thing here.   Southwest isnt losing $50.   You're just getting a discounted seat compared to the normal fare.    They're still going to make money off you with that gift card.

As far as you could tell, were there any restrictions on when or how you could use the cards? Do they expire?