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brad's View (Reply to this comment)
by brad
This is a very well-written and clearly knowledgeable piece. Thanks for sharing your insight. I found it valuable and I think others will, too.
I have a fair amount of experience with extended warranties as well. Sometimes I contradict myself, but I've been lucky.
Most of the time, from what I've read in publications that have gained access to accounting records for firms that sell extended warranties (Best Buy, HP, Dell, firms you cited) make out like bandits on these deals. Overwhelmingly, the products hold up for the duration of the warranty and they make boat loads of money. I've read many recommendations from so-called "experts" who often say that getting the warranty is generally not worth the cost over the long-term (considering one's buying habits over many years).
However, I have needed the extended warranties on a few occasions, and the free tech support.
I've had three Macs. Two I bought new and both with Apple's three-year plan. My iMac G5 had a failed logic board in December, so the warranty paid for itself right there. However, it has to pay for the warranty I bought on the dome-iMac, as that machine didn't require any service.
And I advised my father to buy an extended warranty on his Dell laptop a few years ago, mostly because it was going to be used in a very dirty environment and Dell has a plan that covers even dropping the laptop on the ground. We needed that warranty at least twice, as I recall.
But the next year I bought a Presario laptop and refused the extended warranty, saving me whatever - $100 - and I have not needed it. Or I should say that my folks haven't needed it, since I gave it to them.
So maybe the experts are right. Over the long haul, the price paid for warranties may exceed the replacement costs paid for a small fraction of items that actually failed.
But who knows?
well done.
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Feb 04 '06
2:56 pm PST
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Nice job - Excellent info on service plans (Reply to this comment)
by leftwing0024
I've done a lot of things for a living, but never had the pleasure of retail sales. Typically, I don't buy extended warrantees on anything, as just about everything is covered by some kind of warrantee against it being a lemon. In fact, the first one I ever remember buying was for my first new car (1999 Durango), and it ended up paying for itself in one incident (blown ignition coil on the road - towing, repair, and rental).
My criteria for buying the service plan depends on likeliness (and cost) of needing a repair after the initial warrantee is up.
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Dec 16 '05
7:04 am PST
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Re: Re: ... (Reply to this comment)
by Gr8ful
The problem with that is, if you "think" there is a problem and you take it in, they may say there isn't, then you're stuck with a fee for the service on top of paying for the service plan.
There is a good and bad side to service plans (esspecially from Best Buy) I know, I used to work for them in the service department. There are things that are not covered under the plan that are not mentioned anywhere on the brochure and they don't give you the full details when you buy the plan. For example:
* if the A/C power plug insert on a laptop becomes loose, it is NOT covered under any circumstances and is considered "MISUSE or ABUSE" of the product. Even if it comes loose due to faulty soldering.
* If the alignment of the pulleys inside your vaccuum celaner is off they will fix the alignemnt but YOU have to replace the belt(s). The belts are considered "wear and tear" and are not covered under any circumstance, even if they were worn due to manufacturers defects such as faulty alignement.
These are only two examples of a clear service plan rip-off that stand out in my memory, but I saw many such incidents when I worked there. This combined with the fact that many of the service centers will send units back without fixing the problem even if it is covered and it has to be sent back again.
You have to consider the down time of the product as well. If you send it to the manufacturer directly you have to pay shipping and if it is out of warranty you pay for the parts and labor, but you will get it back usually within two weeks. If you send it to service from a place like Best Buy, you may be without it for up to 4 weeks or more before you get it back.
I had a laptop sent to the Best Buy Baltimore service center that took 3 trips to the service center before they acknowledged a problem and fixed it. In all it was 6 weeks at service (or back and forth between the store and the service center). This can be a serious headache when you NEED the device (like a laptop) for work.
I am not saying people should not buy the service plan, because it does have benfits as well. Such as battery replacement (depending on the place you buy from) at Best Buy. If your camcorder won't hold a charge anymore, they give you a new battery. The same with laptops.
It was my job to sell service plans at Best Buy as well but I never "pushed" the service plan. I simply offered it and let the customer decide. I never had a customer accuse me of selling them a bad service plan because I just laid out the information and they chose it or not. Of course I did get written up several times for telling the customer "What the plan specifically does not cover". They really frown on that at Best Buy, they want to tell them all the positives and steer away from the negatives but if a customer asked me point blank I would not hesitate to tell them.
The point is, "BUYER BE WARE" when it comes to service plans and extended warranties.
Sorry for such a long comment but I felt I had some input on the subject. Thanks for the article.
Gr8ful :-)
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Dec 04 '05
6:38 am PST
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Re: ... (Reply to this comment)
by wsmunch
If you have it and if it doesn't cost anything to have it checked out (I believe that Best Buy has a fee for items which are found non-defective when you have them take a look), send it in if it's having problems. You paid money, so make full use of it.
Some people consider it a conspiracy (mostly older people that I have talked to), though I find it a newfound method of production by manufacturing companies over the past 10 years; products aren't made of the same quality as they used to be, basically being designed with intentional obsolescence. Honestly, I would say that it's semi truthful, since companies have legitimate reasons to use lighter, cheaper materials (for mass-production of popular items to keep costs down and so products aren't heavy like they used to be over a decade ago). Though, it is very convenient to business, manufacturer and retail alike, when products you buy don't last for more than 5 years as to make you go out and spend more money.
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Nov 30 '05
9:29 am PST
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Re: hey there... (Reply to this comment)
by wsmunch
Excellent points, which I have now added into the body. I forgot about my qualifications.. it helps the credibility. =)
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Nov 25 '05
10:07 pm PST
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hey there... (Reply to this comment)
by sleeper54
..
Great advice essay.
It would be a bit stronger (which...as 'helpful' as I already found it...will be tough to do) if you had mentioned your qualifications at the head of the essay.
A question that I'll ask here instead of e-mailing...
you said...
"2) Buy it anyway. Seriously."
So does the associate still get 'credit' for that sale if it is later 'returned'..??
We bought a new TV set from a big-box store (with the initials BB) earlier this fall. Instead of buying the 'name brand' for $60 bucks more we bought their new 'house brand for $60 bucks less and spent that savings on the $59.95 extended service plan. Seemed like a smart move when it sparked and smoked and blinked out two weeks later.
Very interesting advice piece. You should get hundreds, if not thousands, of hits. Clearest piece I have ever found on the subject. Thank you for bringing it here..!
...tom...
"It's significant to note that a 'bumper-to-bumper' automobile warranty doesn't include the bumpers."
—Andrew Green
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Nov 25 '05
6:19 pm PST
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