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TiVo drops DVR prices--with a catch

To attract holiday shoppers, the company lowers the price of its Premiere DVR to $99.99 and its Premiere XL to $299.99. But that's not the whole story.

TiVo Premiere Tivo

TiVo has crafted a holiday offer for its DVRs that will save customers cash in the short term, but potentially cost more over the long term.

The company announced today that consumers can buy the TiVo Premiere for $99.99 if they agree to a one-year service commitment. Even better, TiVo once again has a $0 down offer on its Premiere box with a two-year commitment. Those who want to get their hands on the Premiere XL will pay $299.99 upfront with a one-year commitment.

At first glance, this "limited time" offer seems like a winner for consumers. After all, the Premiere usually retails for $299.99 and the TiVo Premiere XL has been sold for $499.99. But TiVo has thrown in another tidbit: its plans for one- and two-year commitments are $19.99 per month for those discounted boxes, rather than the $12.95 customers typically pay.

With that increase, after the first year with TiVo's $99.99 Premiere offer, for example, customers will pay about $340, which is a nice savings over the $456 they would have paid with the old plan. But TiVo's plan details reveal that after a one-year or two-year commitment is up, plans "will continue at $19.99 per month on a month-to-month basis." So, although the cost in this example is still cheaper after year two--$580 for the new offer compared eiyh $612 on the old pricing scheme--by the end of year three, TiVo's new Premiere option becomes more expensive. The same is true for its Premiere XL offering.

The free TiVo Premiere with a two-year commitment will cost customers more after year four.

Realizing that, TiVo customers should consider their plans with a Premiere or Premiere XL. If they expect to have the device for just a few years, TiVo's new offer might be their best bet. But for those who want to use the set-top box for several years, opting for a lifetime plan, which costs $399, could be a good option. Those consumers could also stick with TiVo's traditional offer, which is still available, and costs $299.99 for the Premiere and $499.99 for the Premiere XL with a $12.95 monthly plan.