warranty services.

I sold computers for Dell for about a year.  Then I moved to other areas within Dell and got off of the sales floor.  The one thing that I learned was that the 3 year warranty is a real cash cow from any company.  Those warranties are not a huge expense to the customer and they are generally a 90% profit to the company that sells them.  That is why we got a spiff, or an additional bonus, for selling one.

As a result, I rarely bought them.  What a waste of my money.

For some reason, when we bought our Kenmore or HotPoint refrigerator (I am not at home right now and I don’t remember which brand it is) from Sears, I was feeling particularly generous, or rich or something, and I had enjoyed our visit with the sales person, so I said yes to the warranty.  Now almost every appliance comes with a short warranty, so this just extended that warranty by about 3 years.

One year later our ice maker quit working.  We go through a lot of ice.  Even in the winter time I drink iced tea like it is going out of style.  It was not a high priority right then, we could get 8 pound bags of ice for about $1.25. No biggie, I could get about 3 or 4 every two weeks, if we were careful.  Then it dawned on me that we were spending about $15 per month for somebody to freeze water for us.  Then I didn’t want to spend that much for something that my freezer could easily do for $2 or $3 per month.

I called the company and was told that my ice maker was out of factory warranty, and had been for about 1 month.  Then the operator said, “But I do see that you purchased the extended warranty, I can have somebody out there next Tuesday”.  It wound up being a $200 repair, but I paid nothing.  Over the next 2 years that purchase of $189 paid for itself 2 more times, and it was fantastic.

Now I have a Kenmore stackable front load washer and dryer, and I love them.  Last May, I extended the warranty again, for the 2nd time.  Mostly because I had to pay for a repair when it was not draining properly.  Two weeks ago I had to call them again, but this time it was covered under warranty.  When the repairman fixed it, he noticed that the spin was VERY loud.  I told him that it had been doing that for a while and I asked him what it would cost to fix it, and he said, “Well you have the warranty, so it won’t cost you anything.”  That would be about as much as a new washer to fix, about $600 which we don’t have the money to buy right now.  So this warranty will really pay off.

I used to resent how much money these warranty programs cost, I now even get the road hazard insurance on tires.  A cash cow for the company who sells them.  As long as it doesn’t cost over about 15% of the cost of the appliance I think I will still buy the warranty on the big stuff.  I hate these sudden expenses, that don’t make me any money.