How Retailers Trap You With “Today Only” Pricing and Overpriced Warranties

You walk into a big-box electronics store for a new refrigerator. The tag says “Was $1,499 – Now $1,099 – Today Only.” That price looks like a steal, so you buy it. The cashier then points to a screen: “For just $199 more, you can add a five-year extended warranty that covers everything.” You hesitate, but the clerk says the manufacturer’s warranty only lasts one year and covers very little. So you add it. Congratulations: you just fell for a two-step trick that costs middle-class Americans billions every year.

Let’s break down what really happened. First, the “Was” price is almost always a fiction. Retailers set an artificially high original price – one that the item never actually sold for – to make the sale price look dramatic. This is called price anchoring. They know you are more likely to buy when you think you are getting a deal. The “Today Only” tag adds false urgency. That refrigerator may stay at that same price every day for the next three months, but you don’t know that. The store wants you to decide now, before you do any comparison shopping. The Federal Trade Commission has pursued cases against retailers for this deceptive pricing, but the practice remains common because it works.

Now the second trap: the extended warranty. The clerk tells you the manufacturer’s warranty is weak. In most cases, that is a lie. Major appliances from brands like Whirlpool, GE, and Samsung typically come with a one-year parts-and-labor warranty, plus separate coverage for the sealed system (compressor) that often runs five to ten years. Your new refrigerator likely already has a five-year warranty on the compressor. The store’s $199 extended plan duplicates that coverage. What the clerk doesn’t mention is that many extended warranties also have exclusions for normal wear and tear, cosmetic damage, and minor parts like shelves or ice makers. When something actually breaks, you may find your “comprehensive” warranty covers very little.

The profit margin on extended warranties is enormous – often 50% to 80% of the price goes straight to the retailer’s bottom line. That is why every salesperson is trained to push them hard. They call it “selling the service plan.” They are told to mention it at the register when you are tired and just want to leave. And because you already feel good about the discount you got on the appliance, you are more willing to say yes to a smaller additional expense. Behavioral psychologists call this the “foot-in-the-door” technique.

So how do you spot and avoid this trick? First, ignore the “Was” price. Look up the same model on a site like Amazon, Best Buy, or Home Depot to see what it actually sells for elsewhere. Do this before you go to the store. If the sale price is genuinely lower than the typical market price, great. If not, you are being set up. Second, never buy an extended warranty at the register. Take the manufacturer’s warranty home and read it. Then decide if you need more coverage. In most cases, you don’t. The Consumer Reports data show that the average cost of an extended warranty far exceeds the average cost of repairs. You are better off putting that $199 into a savings account for future repairs.

There is also a hidden benefit to skipping the store’s warranty: you retain the right to use an independent repair person. Store warranties often require you to use their authorized service centers, which may be slow or charge inflated prices after the warranty period ends. With the manufacturer’s warranty, you can call the company directly and choose any licensed repair technician.

The middle-class American shopper is the prime target for these tactics because you have enough money to afford the extras but not enough to waste it. Retailers know you value reliability and fear expensive repairs. They exploit that fear. The solution is simple: research prices, ignore manufactured urgency, and say no to extended warranties until you have read the fine print. You will save hundreds of dollars per purchase – and you will be a much harder mark for the next trick.