If you’re like most consumers, myself included, you decline extended product warranties without thinking twice; convinced that it’s just another sales technique to get more money. Personally, I used to assume that when investing in a large piece of equipment any defects with the machine would show up within a year and be covered by the manufacturer’s warranty. Well, like I said, that what I used to think.
A while back, I purchased a new name brand washer for my home. When prompted to purchase an extended warranty, I did what I always do, checked the “No Thank You” box as it already came with a one year manufacturer warranty. I figured I was covered. One year passed with no issues or problems. After a while (the time frame of which my extended warranty would have been in effect), the machine started shaking and bouncing around the floor. I called in a technician only to find out that the motor, through no fault of the manufacturer, was going bad. Motors burn out, it happens. After browsing the internet to research parts and find the best price, I finally found a motor for my machine for the “bargain” price of $320.00. $320!! My extended equipment warranty would have only cost me $83.00. Why didn’t I just purchase the extended warranty?!? Seriously, what’s another $83 when you’re already spending hundreds of dollars? Like they say, hindsight is always 20/20.
Now the intent of this article is not to say that everyone should always purchase an extended equipment warranty; but rather how to avoid the same 20/20 hindsight I experienced by determining if an extended equipment warranty is right for you before you need it. Determining the answers to these questions and what they mean for your organization can help you decide if an extended equipment warranty makes sense for you. Typically, the more important the product is to your operation, the more important the warranty becomes.
1) What is the lifespan of your current equipment?
2) What’s the likelihood something will burn out/need replacing during this lifespan?
3) What will the cost of repairs be if parts on this machine break (don’t forget to include the time you invested)?
4) How important is this piece of equipment to your overall operation?
5) How much would lost production cost if this machine were down for repairs?