I know the basics of extended warranties obviously. They are pushed by highly motivated sales teams because they are paid high margins on any sales they can generate. In many cases, they’ll make as much on the sale of the warranty as they do for the actual product. I’m not stupid. If the-shop and sales guy is making a killing on this, then it means that consumers are very frequently losing money. Thus, as a consumer, I should always be saying no.
Same Thing As Insurance?
You could say the same couple of things about insurance. The companies and sales guys are making money and for most of us buying insurance, it’s a losing bargain. The big difference though is that when I shop for insurance, I can get quotes from dozens of companies which forces them to offer competitive quotes. On extended warranties however, you get one quote from one sales guy. Are you paying 20% too much? 50%? Even more? Why is it that frequently when I say no, they’ll try to sell it to me for 40% less… why not offer a fair price from the start?
I Still Make The Mistake
A few years ago, I purchased my first ever iPod at a Future Shop store (owned by Best Buy). I was ignorant and probably overly excited. I ended up getting the extended warranty. I figured it would be useful in case something ended up going wrong. These were the first generations so there were more bugs than what you’d expect to see these days. I was told they’d repair it for free and replace it after 3 repairs if needed.. Fair enough, it’s not like I’ll even get there…..right?
Bug #1– A few months after buying the iPod, I ended up having issues with the battery, it would basically work for 10 minutes or so.. I headed to the store where they told me that I had to deal directly with Apple in the first year of my contract. I now know this is standard but at the time I was surprised. Turns out that Apple had a great and easy to use process, they shipped me a “refurbished” one within days and less than a week later I was set to go…
Bug #2-A bit after that 1 year mark, I ended up running into some issues with the software. I was unable to start up the ipad and would instead get directed to an error screen.. Great! So I headed to the store, they were now in charge of servinig the warranty. Great.. I now have a local store, it should be matter of hours right? In fact, they had to ship it away and it took 3 weeks!?!?!? Are you f^&** serious? When I have a phone, laptop or iPod, its usually something that I use every day. If I had known that this was the case, I never would have gone for this warranty. In any case, after 3 weeks, I got it back and it was working fine!
Bug #3-The files started erasing themselves once in a while. It would happen once a week where everything would be wiped out. I couldn’t believe it. I had to go back to the store to ask for ANOTHER repair… incredible. So I left it off for another few weeks and got it back.
Bug #4-A few days after getting my iPod back, I was listenining to music in the subway when I started to smell something was burning. Couldn’t be right? No way… iPod again…! The only good news was that I’d finally get a new one. Finally, after 3 repairs, a couple of months without my iPod and hours spent waiting in the store, I’d get a new one… That’s until I got to the store where they told me that this wasn’t considered a new break but was actually a guarantee from the previous repair. WHAT!?!?!?? So no, I wouldn’t get anything. At this point it was too much.. I stayed there, complained, argued, it took over 90 minutes but they finally decided to give me a new iPod
Then guess what happened
They asked if I’d be interested in an extended warranty on the new iPod!! WOW.. Those guys had some nerves. Yes, I did end up getting a new iPod thanks to the warranty but I spent so much time, had such bad service that I wouldn’t even say it was worth it. So imagine if it had not breaken… Believe me, just thinking about this story is a powerful reminder of why I’m not buying any more extended warranties, especially in a place like Best Buy where 100% of the attention is on selling the warranty but once that’s accomplished, no one cares about actually offering the service….
Have you purchased extended warranties? If so, how did that end up going?