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Do You Buy Extended Warranties?
Stackdump asks: "I am a college student (senior seeking CS BS). I work partime at Best Buy selling computers (arg!). To be truthful I don't really sell computers; I sell what we call 'performance service plans' or PSP's for short. This is the somewhat gimmicky name given to Best Buy's extended warranties. To be fair they do actually provide some service in the store, swapping HDs, CDROMs, and so forth, but most of the hardcore repairs are done elsewhere or by the manufacturer. Prices range from $99 on the cheapest tower to $249 on laptops over $1000. Terms of service are pretty simple everything is covered against power surge, dust contamination, whatever... BUT abuse is not covered: so slam a pencil in your laptop and say byebye, but fry your computer because you don't have a surge protector and you can get a new one. As this is the central pre-occupation of my work day I ask the Slashdot community this: do you feel these warranties are really worth the money?"
After working a full 10 days at Best Buy in the same position (and quitting in disgust at how it was to work there), I can proudly say that we did not, in fact, get any sort of commission for those asinine service plans. Actually, it seemed my employment was dependent on selling them, but there were no obvious positive insentives for me to sell them whatsoever. I don't know if the policy has changed, but we were required to say something like, "I'll be honest with you since I don't get commission from these sales."
I would also like to take this opportunity to say that my 'boss' there, Justin who was 4 years younger than me and knew next to nothing about computers except that '3dfx rocks, dude', was a dick. Hi Justin!
I almost bought one on a digital camcorder, particularly because the saleskid said it would be covered if it got dropped, got wet, etc. But when I read the policy before checking out, almost everything he said was wrong. Almost nothing was covered. Now I never buy them.
I have had my cell phone "break" about 5 times now over 2 years to get a full replacement each time.
Also these things will cover your laptop battery for years. Consider the cost of a replacement battery (for most laptops this is the same as the cost of the PSP) its an insanely great deal.
Over all, I figure I have cost BestBuy about twice as much as they ever paid me :) Would I buy anything from them with one of these deals without the discount? Hell No!
I have gotten the warranty on almost everything i have bought @ circuit City, and it has been worth it every time.
My desktop computer - Warranty cost = $149
Replaced HD - (got a bigger one for free)
Replaced CD drive (got a faster one)
Replaced Monitor (got a better one)
My Laptop - $199
Replaced HD (dropped it)
Replaced DVD
Replaced Monitor Port on back (got bunged up)
still got time left
and the video card is gonna fry soon so... (contact me if u have any exp for why my compaq 1700XL 265 screen would turn white and not go back till it cools off)
My Stereo - $60 for a $500 surround sound package
Replaced Reciever (power surge)
Replaced Center speaker ??
My Minidisc - 40ish
they will send me a check for 149.99 (what i paid) if it breaks
(it may break about a month before 2 years???)
Conscience is the inner voice that warns us somebody is looking - H.L. Mencken
First, let me preface this with a disclaimer: A large part of my family's stock portfolio is in Best Buy, so I'm biased toward the store.
Having said that, of course they're not worth it, and simple math should show you that. If it were worth it for the customer, a product of this type would not make a profit for the store and they wouldn't be pusing them so hard.
If I spend $100 on an extended warranty (whatever it's called), and get $100 in parts for it, the store doesn't make money. They make a profit because the products are generally reliable and only a tiny fraction of these extended warranties. It's the same as insurance -- you pay huge bucks for insurance and if you ever file a claim, they either drop you or up your premium to help pay for what they've spent. In theory, you're paying them to take care of you if you ever need it. As long as you're paying in and not taking out, they make money.
As long as most customers that buy extended warranties don't file claims, the store makes a huge profit. You can bet that if a particular product were unstable and not reliable and everyone who bought an extended warranty on it filed a claim, they'd stop offering the e.w. on that product because it would no longer be profitable.
On the other hand, if you're Joe User and have a life (instead of spending it all mucking w/ 'puters), there is the benefit of not having to worry about replacing parts.
I purchased one on a few things... sometimes, if you use them, they make sense.
For example, I purchased a handspring visor prism and paid 80$ for a warranty. 1.5 years later, the battery ceased holding a charge. I took it back to my local best buy, and they took it back, and gave me credit for 450$ towards a new handheld. When i picked the sony clie 615c, they rang it up as 450$ instead of 350$, so that I would have the full amount of credit if it ever went bad. I havent had to use that yet, but wouldnt hesitate if i had a problem. It was a completely painless experience.
In fact, it prompted me to spend the money on a plan for my digital camera, because it also covers the batteries and such. So in a year, when the 100$ battery stops charging fully, i can just swap for a new one... all because of a $30 up front plan.
In some cases it doesnt make sense. But in the case of smaller things where some essential component cant be cheaply replaced (i.e. batteries in pdas, digitizers, lenses, etc) it makes a ton of sense... and if you ever need it, they essentially throw in an upgrade for free.
Not a bad deal really.
I don't buy extended warranties as a rule. On my $500 (Canadian) purchase of a Radeon 9700, the extended warranty would have been something like $60 and it ALREADY COMES WITH A MANUFACTURER'S WARRANTY good for three years.
However, one product I will buy extended warranties on is laptops. However, the price mentioned here is terrible. Dell will sell me a Complete warranty for three years for about $350 Canadian and that DOES cover abuse. Paying more than that (you list $250 U.S.) and not getting covered if I drop my laptop, that's just a scam. I mean, laptops simply don't break often enough to justify that kind of price unless it also covers abuse.
No, I feel actually quite insulted, generally, when offered an extended warranty. Particularly after seeing the complete incompetance of the technicians at Future Shop (the only place here in Canada that routinely offers to sell me the warranties).
Oceania has always been at war with Eastasia.
My wife and I ended up walking out of Circuit City a couple of years ago over this extended warranty for a new Sony digital video camera we were trying to purchase. I explained to the salesman I didn't want it, then his boss, then the store manager. I finally asked if it was more important they sell the camera without a warranty or not sell anything at all. None of them had an answer, so we walked and I ordered the same model from Crutchfield that night. They lost a very expensive sale of a camera because they wouldn't let me buy it without the warranty.
I think they were very deceptive in how they explained the warranty as well. The salesman told us that DV cameras were very delicate and needed to be professionally cleaned twice a year at a cost of nearly $100/year just for cleaning. I explained that my department at work supports several of these in an educational environment and they are never cleaned, but that didn't satisfy him. Really frustrating.
Jason
"FORMAT C:" - Kills bugs dead!
Incredible as it sounds, the manager probably didn't want you to buy the product unless you got the extended warranty. Some of the big retail chains had extreme "incentive" programs that pressured the sales people to sell at least X% of their products with extended warranties.
So begins the law of unintended consequences. If the employee can't increase the numerator (number of warranties sold) they figure they need to reduce the denominator (total sales) to make their percentage!
I say "had" because by this point management has figured out that reducing your sales this way is a bad idea...
Electronics Boutique offers extended service agreements on everything. It's basically insurance, since they cover everything except theft.
But you need to ask yourself what's worth the insurance, and what's not. Is it worth another 50$ to have your PS2 replaced with no questions asked for 2 years? How about little GBA game holders? (A pack is 5$, the ESA is 3$).
On some items it really makes sense, on others it doesn't. I'm glad I paid the extra 100$ on my TV, because I get it fixed for free. I bought an ESA on my Xbox, and am happily on #5 (2 motherboard failures, 2 bad DVD rom drives). The failure rates on the first gen consoles from Sony and Microsoft are scary.
--
Internet Explorer (n): Another bug -- that is, a feature that can't be turned off -- in Windows.
I personally like IBM's (ThinkPad) on-site service (warranty). If your laptop's monitor gets fried, a guy from IBM comes to your office and fix it for you right there. Hard drive, keyboard, same thing.
But whether the price you pay for ($1000.00+?) works for you really depends on your circumstances. If you live in a country side (I don't know, Texas?), it can take hours for tech guy to get your house; on the other hand, if you live in a city like SF, NY, they might be working a couple of blocks away from your office and tech guy can come knock your door within 30 minutes after you call them.
Also this type of service depends on what work you do and how much money you are making. If you are one of super star developer/architect and use computers 60 hrs/wk or more and make 100$/hr plus, money is well worth it. On-site service mitigates your loss to, $200.00 - $300.00? What if you have no warranty and you need to order new computer? You'd lose $1000.00? $2000.00? Maybe more.