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What is a Price Protection Guarantee?

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  • Written By: R. Kayne
  • Edited By: O. Wallace
  • Last Modified Date: 31 July 2014
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A price protection guarantee extends assurances to a consumer that upon buying an item, if the customer finds the same item cheaper from another vendor, the original seller will match the price by refunding the difference to the buyer. Some vendors advertise an even greater offer, such as a “115% price protection guarantee,” indicating they will refund the difference plus 15% to give the customer an even deeper discount. A time restraint of 30 days is typical, and other conditions apply which can vary among retailers.

A price protection guarantee provides a powerful incentive for building online customer loyalty in an economic model that allows for easy comparative shopping and highly competitive pricing. Even before a customer buys an item, he or she can use the guarantee to ask a vendor to match a lower price.

In general consumers tend towards brand and vendor loyalty when the brand or vendor provides good services and a positive transaction history. Some of the things that keep consumers coming back to a vendor are fast shipping with reasonable shipping rates, generous return policies, and good customer service. If a consumer finds these factors present in a vendor that also offers a price protection guarantee, the chances are greater that the consumer will be a loyal (repeat) customer. Rather than buying an item found cheaper elsewhere, the customer will be more likely to bring the price back to the vendor.

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While competitive pricing is one of the biggest reasons consumers spread their dollars between retailers, there are many advantages to buying from the same vendor repeatedly. Repeat purchases are easier and faster for the consumer: in most cases the customer has an established account with credit card number and shipping information already on file. Repeat purchases reduce privacy concerns: fewer vendors have personal information about the customer. Finally, repeat purchases are less stressful on the consumer: a positive track record of previous transactions exists. In many cases, this guarantee removes the only real incentive for a satisfied customer to go elsewhere.

While these programs are great for consumers, retailers must protect themselves from fraud in order to continue to offer such programs. A few of the conditions that normally apply to a price protection guarantee program are that claims of a lower price must be easily verifiable by the vendor; the product must be in stock at the advertised price; and the product must be in new (unopened) condition. Model numbers must match exactly and other factors and conditions might also apply. Read each vendor’s policy carefully.

Many real-world retailers also offer similar guarantee programs that apply towards other real-world retailers. In other words, they will honor a lower price found at a competitor down the street or across town, but cannot extend the offer to lower prices found online. Online retailers have drastically different sales models that, in many cases, do not require large staffs or commercial building contracts like their real-world counterparts.

The next time you’re shopping for an item, look to see if the vendor offers a price protection guarantee program. Be sure to check how long the guarantee lasts, and what conditions apply. Then find the best price on your item and take it back to the vendor of choice. If you care to, watch for the best price of the item over the next 30 days to take full advantage of your price protection guarantee.

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Discuss this Article

anon348071
Post 6

There's way too much red tape and fine print associated with most retailers' price matching/protection policies. They really make sure to cover their rear ends so they don't have to pay much out.

I use services like Price Deputy, which automatically monitors my online purchases and notifies me if there is a price match guarantee I'm eligible for. It's free, too.

comfyshoes
Post 4

Latte31- Also when you sign a lease, there is also a lease guarantee which means the price of your lease will stay the same during the term of your lease.

The rent cannot be raised beyond the stated amount in the lease. This is another form of a price guarantee and the major reason why people sign leases.

latte31
Post 3

Moldova- I also wanted to add the SBA guaranteed loan offers rates 5.75% to 9.5%. This is a guaranteed loan with a fixed rate for small businesses.

These are usually the lowest rates available and the SBA guarantees 80% of the loan for term of 10 years. The SBA will provide this guarantee regardless of what the market rates are.

Moldova
Post 2

BrickBack- Best Buy also offers protection guarantees to its customers. This creates goodwill with the customers and makes them feel that Best Buy will always offer the lowest price.

Therefore there would be no need to shop at a competing retailer.

BrickBack
Post 1

Many large retailers offer a price guarantee so that customers will continue to be loyal to them.

For example, Staples offers a price match guarantee online and in the stores. There are a few conditions.

The product has to be the exact item that is offered at a reduced price. Also, the item has to be in stock at Staples and at the competitor.

This often has to be verified in order for the customer to receive the price match.

If there is a slight variation on the product like a different color or size than the price match is not granted.

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