You thought wrong.  Under $40, there are various sales throughout the year where you can get it for that.  Howevever, at $335.98 that's 16 months instead of 18 months before you've reached the same amount on the EFA plan that you'd spend in one year buying it outright, if my memory serves me correctly.

Protip:

If you can't afford to drop $500 on a product, you probably shouldn't be considering purchasing it in the first place, let alone considering installment plans.

What makes sense for large purchases (cars, houses) does not make much sense for small purchases.

That's just what xbros always tell me.

Sorry OP, but i'm not really interested in Rent a Center - Microsoft division. It's more expensive up front, but cheaper in the long run thus it's not a good deal to me.

You seem like the perfect target audience for my new financial product, "Cheeseburgers-for-all": Instead of paying the whole price of 1 dollar upfront, you'll pay for it via a 24 month payment plan: In the first 23 months you pay nothing at all, but in the last month you pay 100 dollars.

Regardless of whether or not you like cheeseburgers or not, at the end of 12 months you've still paid nothing.  The math isn't that hard, a third grader can do it.  I will include the spread sheet output at the end of a later post. 

At the end of one year you'll have $1 in the bank over buying it outright. 

You're still committed to the 2 years, but it takes another 11 months before buying it outright costs less.  In the mean time, in those previous 23 months, the $1 difference paid on day one can be used to work for you.  Either to pay other bills, or earn interest.

An electrontronic device is not food.

Purchasing consumables on credit is a foolish thing, because you're paying for it long after the value of it has gone.  Paying for an electronic device via a payment option can be beneficial to your financial situation.  The value may diminish over time, but there is still value with electronics.  

Your analogy fails for the simple fact that the cost of the penalty is a 10000% fee in your case.  The Xbox EFA plan isn't the most expensive purchase option, yours is.  Your suggestive plan is a no-brainer to avoid.  The EFA plan is a smart option suitable for a wide variety of consumers.

Funny, if it's such a good deal then why are people not using the plan? Now I can't speak for everyone but at least in the area I live in nobody is buying an xbox through this plan. I've worked at best buy since last october and only 2 people have bought an xbox through plan when I work.

We always get people asking about this "$99" dollar xbox but as soon as we mention that your locked into getting live at $15 a month they either laugh and leave or ask how much it would be to get it up front. Which I tell them $420 vs $460 and they opt to just save their money to buy it outright. Hell half the people who buy xbox's at the store I work at don't even have wi-fi so this plan isn't even an option.

Also last time I did one (which was a few months ago) it did require them to have a credit card and checked their credit history. The fact is when it comes to a gaming console this plan just won't work when most people don't want to pay $15 a month for 2 years for a service they may or may not use. Plus remember you have to cancel the plan after your 2 years are up otherwise it auto renews.

Different philosophy. I worked hard to pay of my mortgage as fast as possible and now I live completely debt free. It feels awesome, true financial freedom.  The bank tried to sell me a mortgage again so that money can 'work for me'. Sure I'll take a risk with my house while the bank collects a guaranteed percentage of it every year, no thanks.
I have some investments too, but nothing I can't miss.

Anyway that's off topic. Payment plan is fine for certain people, not for me anyway. I also wonder how beneficial it is to retailers? What cut do they get? They have a lot less room to offer deals on these plans. Buy one on sale for $200 plus gold live for $40, seems to be the better option. You get to keep the remaining $178 indefinitely.

Because its more expensive to make and it has lost Sony billions.

about that 360 $199 model, it doesn't count. That's a barebones model. I wouldn't count that one like I wouldn't count that 12gb Super Slim PS3 that released in Europe.

So I guess I'll simply tell my electricity supplier that I would be foolish to pay my last year's electricity bill. I'd be paying for something long after its value is gone! ;)

You could just as well create a ridiculous imaginary scenario where paying a cheeseburger via a payment option CAN be beneficial to one's financial situation as well. For example, there's always the theoretical possibility to that you invest that 1 dollar very very clever and make much more than 100 dollars out of it in 2 years.

But since we are talking about a concrete product anyway: please, tell me how exactly paying for an Xbox 360 via the E.F.A. plan could actually turn out to be financially beneficial after 2 years. I'm quite sure that whatever scenario you come up with, it will be rather constructed as well.

I chose a 1:1 copy of your argumentation to show that the very same argumentation can be adopted for a payment plan that is so ridiculous anyone instantly realizes, to prove that this argumentation is pointless without looking at the specifics of the actual contract.

BTW, this reminds me of a funny story a mathematician recently told to explain some parts of what is going wrong in the present-day financial world ("system-relevant banks" etc.). He was invited by a bank that wondered if mathematics could somehow further increase their profits.

He said: "Well, I have an offer for you that you might find very interesting: Give me 2 million dollars, and in case my investments are successful you will get 3 million dollars back, so a 50% increase in value."

The bankers said: "Wow, a 50% increase a value?!?!? That is absolutely incredible!!! How on earth are you going to do that?"

He said: "Easy: I'll take all the money, go straight to the roulette table in the casino and place it on red. If I'm lucky, I'll have 4 million dollars afterwards and can keep 1 million. If I'm unlucky, it's you who lost all the money."