What is a Price Protection Guarantee?

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.

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.