I have to admit I've pulled rolls of cash out of my pocket and held it up to show the manager of guitar stores after being offended that they told me they wouldn't get a guitar down for me to try unless I was ready to buy right then. But to play devils advocate for a minute -
I'm pretty sure most GC employees don't pay their rent selling guitars over 900 bucks. What's the commission on 10 grand of USA PRS even, maybe 1000 bucks? If you like something, no matter the price, they'll always hedge the sale and show you something they think someone can impulse buy and walk out with immediately. Sounds to me like he thought you weren't sold on the features of a 1200 dollar budget guitar, but could and would drop $699 on a budget guitar you might like with very similar features.
He could've gone the upsell instead, but - not judging a book by its cover, or personally dealing with you before, its an odds game. Are you, a guy looking at a mid range american guitar and complaining, more likely to buy from this guy right now - something that cost 700, or something that costs 3 grand? I dont care how rich you are, everyone buys a cheap guitar with less thought than an expensive one. You didnt buy, but 8 out of the other 9 people he tries that on might. The cheaper the item, the faster the sale and the less likely a return, which means more commissions that stick. When I go to Nordstrom and buy Italian jeans. they always show me the Moroccan or wherever jeans that are 200 bucks less expensive and just as good. Why? Because they don't know me, and even though I have Italian jeans on now - the economy sucks and maybe I'd appreciate a deal today. If Im buying the italians Im still buying them, but A small sale is most definitely better than an "Awesome I really want these let me think about it a few days and I'll come back in and maybe remember to ask for you if you're here"
Of course, I do agree he could've done a much better sales job probing for needs instead of assuming on you like that, lest this sound like I'm defending him - the phrase "If that's too much for you" isn't the best emotional response trigger for making you happy, but you'll admit it DID make you open up immediately about your financial position. If the salesman had probed for needs better is it possible he could've convinced you you were in the market for a new American PRS today and he could've earned the sale? or at the least a follow up? Could the salesmans partner have come in and told you how he was sorry about the other salesmans pitch, and rung up that new guitar instead for you since he knew you were well heeled? Is it possible there were any other customers behind you looking at an S2 model guitar and having their purchasing decision being influenced by you?
Final food for thought - its human nature to disparage something that causes envy or jealousy. I can't tell you how many people I've seen say aloud how a Gibson sucks and is too much and how cheap the hardware seems, then walk out of the store ecstatic with a Epiphone the salesman showed them.
OTOH I used to know a pilot that loved to play his cheap Epiphone Les Paul. He was real careful with it - always kept it in his mansion - never left it in his hangar. Poor guy had a heart attack in one of his own aeroplanes and died, leaving his family with millions to remember him- and a cheap epiphone guitar.