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The Pros and Cons of Extended Warranties Print E-mail
Saturday, 01 April 2006
Article Index
The Pros and Cons of Extended Warranties
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The idea of buying a warranty for your HDTV in your living room that is used by every member of your family, each and every day for six to eight hours per day, has its merits. The amount of use and the size of the component make it difficult to just drop off at a dealer. Ask whoever you are looking to buy your set from about their service. If you are looking at a 61-inch rear-projection HDTV or a 220-pound 34-inch tube CRT HDTV like I have, you want to know if they are coming out to either pick up your set for repair or making the repair on the premises. If they are taking away the set, do you get a loaner? Do you need one, assuming there are other TVs to watch around the house? Does your repair company farm out their service or have their own technicians?

The value proposition remains the same: if the cost of the warranty isn’t too expensive and the dealer offers good service, it could be very well worth your time and money to invest in an extended warranty.’s Bryan Dailey popped for a $300 warranty on his JVC HD-ILA rear-projection set because he got five years of coverage for 10 percent additional cost. The deal was fair and, if anything did go wrong, he was covered nicely.

Fear Not the Negotiation
Make no mistake in understanding that extended warranties are the single most profitable sale in the store. Managers push and push and push salespeople to sell you warranties. Because of this, you can often negotiate a lower price on the warranty. Many years ago, when I was a teenager, I worked for a chain of stores in Philadelphia that encouraged the sale of warranties on everything. In my audiophile snobbery of days past, I refused to sell them on certain components, such as speakers. I felt that for $1,000, you shouldn’t need extra protection for speakers. The additional money was better spent on a more powerful amp or receiver, since speakers are never blown from too much power. Problems are caused from too little power. Cables provided additional “attach sale” opportunities to make sure the profits on my sales were nice and high. Executives above my manager loved my cable sales, but scolded me for not selling enough warranties, eventually causing me to leave and go to work for the cross-town rival. Resellers take warranties very seriously, I learned at the very young age of 16.

When getting close to pulling the trigger on a deal at a retailer, fear not asking for a price break on the warranty. At that point, any salesman with a brain attached to his skull will ask you the close: “If I can get you the warranty on this HDTV for $300 down from $500, will you do the transaction today?” This tests your seriousness and, if you are serious, then you have nothing to worry about. You may find a retailer willing to drop the price of a component or a set lower than you might have expected to sell you the warranty, and at that point, what do you care? They may sell you a plasma at cost just for the lucrative commission that comes from the warranty. As long as the deal is good for you – do it.


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