Is it my imagination, or are companies offering extended product warranties way more often than they used to?
Oh, I’m being coy. I know the answer—Portia reads the papers! 74% of electronics shoppers and 85% of appliance shoppers get the extended warranty pitch during their shopping experience.
Whether in-person at the Apple Store or online at Amazon, it seems like every purchase now comes with a suggested extended warranty. And it’s not just for computers and smartphones. I’ve gotten these offers on crappy $10 earbuds, pet hair vacuum cleaners, and brass floor lamps.
Why are companies pushing these special extended warranties? And how do you know if purchasing one is in your best interest?
I’m proud to say that I’ve developed a formula to answer this very question, and I’ve put it into a helpful flowchart for all you good boys and girls. But it wouldn’t be a Kitty article if I didn’t bury my lede under some quasi-socialist deconstructions of consumerism first!
Unsubstantiated tinfoil hat conspiracy theories about why product warranties are having their day
Warranties print money for the companies that sell them
From Consumer Reports: “stores keep 50 percent or more of what they charge for these contracts. That’s much more than they can make selling products.”
We’ve said it before, and we’ll say it again: companies don’t sell things unless they’re able to turn a profit by doing so.
If the terms of the warranty policies were generous and favorable to the consumer, the company would have—quite literally—no business selling it. I am sure they have carefully crafted their pricing and policies to ensure that they come out ahead. I don’t think it’s a coincidence that Best Buy started offering warranties on almost everything around the same time their industry competition heated to a boiling point. It’s an effortless way for them to generate cash when they’re getting crushed by online retailers.
Warranties address consumer anxieties
Warranties are a great way to address consumer anxieties. And anxieties get higher as a glut of choice and information related to those choices overwhelms consumers. It whispers of a risk-free experience: if anything goes wrong, someone will swoop in and fix things for you! Warranties feel like a mulligan for an anxious consumer. “If I chose wrong, I’ll get another chance.”
Take Casper Mattresses, for example. It’s a startup that sells mattresses online. They have an “effortless” return policy that, I’m sure, is quite expensive for them to operate. But that high expense is an absolute necessity, because without it, few people would be willing to buy a mattress unlaid and sight unseen. It’s worth it to bake the return policy into their business model because without it, they wouldn’t be in business.
Warranties are a service differentiator
There are some companies that operate warranty programs at-cost or even at a loss. The companies that offer them don’t do so willy-nilly. It’s a strategic investment. They’re banking on the fact that making it easy to shop, return, and get repairs or replacements will correspond with a greater willingness to buy non-unique items from that company.
Zappos is a good example of this principle in practice. You can buy shoes pretty much anywhere, online or in-person. The price difference from retailer to retailer is usually small or nonexistent. So to set themselves apart, they built an extra cushy exchange policy as their key service differentiator. It worked really well for them. It’s why they have cult status among online shoppers, and many other retailers have been forced to offer the same to keep up.
Warranties substitute for quality control
There’s a fascinating This American Life episode contrasting American and Japanese styles of car manufacturing. The American philosophy at the time was “never stop the line.” If manufacturing workers realized that a previous piece had been installed incorrectly, they were expected to continue sending the defective car down, and never pull the cord that stopped production. These incorrectly assembled cars would pile up at the end of the line, where secondary teams would disassemble or scrap them.
The Japanese system, by contrast, was built around a philosophy of kaizen, or “continuous improvement.” This philosophy rewarded workers for catching mistakes, even if they halted production. The teams would then work together to find not only the cause of the problem, but its root. Then they would correct it so that the mistake would never be repeated. That, in a nutshell, is why Japanese cars have a sterling reputation.
I’ve bought dozens of items over my lifetime that I knew were shoddy constructions destined for landfills. Who hasn’t been in an Ikea aisle with their roommate or partner and said, “Well, this is a piece of shit, let’s get it now and replace it with something better when it falls apart”?
There are companies that make warranties carry the load in what should be a diversified quality assurance system. They’ll assemble things sloppily assuming that, if their product doesn’t work, the consumer can just return it. But this methodology hassles consumers, wastes resources, fills landfills, and tanks the manufacturer’s reputation.
And here’s more on what we think about that nonsense:
- Ethical Consumption: How to Pollute the Planet and Exploit Labor Slightly Less
- You Deserve Cheap Toilet Paper, You Beautiful Fucking Moon Goddess
- You Are above Bottled Water, You Elegant Land Mermaid
- Fast Fashion: Why It’s Fucking up the World and How To Avoid It
Warranties are, yes, a way of expressing confidence in quality
Okay, so it’s not all bad. If you really think that what you sell is good, why wouldn’t you stand behind it with a strong warranty?
Using the above example, a Japanese car manufacturer may offer a warranty with pride knowing it’s extremely unlikely that the consumer will ever need to use it. An “unsatisfied for any reason” or “no questions asked” guarantee is sometimes a sincere expression of professional pride in the product or service.
So when should you get an extended warranty?
I promised you a flowchart to help make these decisions.
I’m really excited to see what you think of it. Of all the graphics I’ve created for the site, it’s probably the one that best captures my skill as a professional data visualizer. Are you ready?!
I know what you’re thinking. “Surely it can’t be that simple!” But it is.
Why extended product warranties aren’t worth it
Warranties are designed to not do what you assume they’ll do
You’d think that something like, say, your smartphone, is a good item for which to get an extended warranty. It’s an expensive workhorse. Wouldn’t it be nice to know that you could get it repaired for free if you dropped it and the screen shattered?
Hahaha, as if! Almost no warranty will cover something like accidental, user-inflicted physical damage. Same goes for water damage, theft, or any number of common scenarios.
From a Consumer Reports article that agrees with me:
“Extended warranties also can exclude a variety of parts. For example, among the refrigerator parts that aren’t covered under one home service contract we recently reviewed are icemakers, beverage dispensers, door seals and gaskets, hinges, lighting and handles. An auto service contract we examined excludes brake drums and rotors, air bags, door handles, lock cylinders, the exhaust system, body panels, among other parts.”
Warranties can be voided by taking, or not taking, actions stipulated in a dense contract. If your washer breaks down, and you don’t have the receipts to prove that you had it serviced yearly by one of their certified maintenance professionals, then your warranty could be void.
The service window also seems designed to close when repairs are most likely to be needed. A one-year extended warranty is offered on products they know start breaking down around your second year of owning them.
The process is inevitably frustrating
The bureaucratic process of seeing a warranty fulfillment through to its end is fucking exhausting. And I cynically believe that many companies understand this, and don’t put resources into making it better, because they want to low-key discourage people from taking them up on it.
I recently purchased a fine art printer, and wanted to return it when I realized how poorly it handled the particular kind of artwork I wanted to print. It took two months and nine hours on the phone before Epson agreed to take it back.
The folks I was speaking with were clearly on tightly scripted customer service rails, and they forced me to go through the same thousand-step technical troubleshooting torture every time I called before they would forward me to the department I needed to speak to. I haven’t felt that tormented since junior high!
Me, nearly in tears of frustration: “Please. This is my fourth time calling. I’ve done this process three times already. I know all the things you’re going to recommend trying, and I’ve tried them all. Can you please forward me to the returns team?”
Customer service rep: <baffled silence, followed by my fourth round of instructions on how to clean the print heads>
It was such a spirit-crushingly tedious experience that I considered throwing the printer (and my money) away and chalking it up to a hard lesson learned. My time was so much more valuable than the stupid printer. And I’m not going to lie, I think the only thing that stopped me was the fact that the printer was too large to fit in my garbage bin. That, and my pure animalistic stubbornness.
You’ll need to fight the bad fight
Epson did ask me to prove my story by sending photos of the badly-printed artwork. In a way, I was lucky, because I had proof. There are many, many cases of companies initially declining to repair or replace an item, even if it’s under warranty, because they don’t believe you.
Listen to me.
I am a grown-ass woman living in America in 2017.
My whole life, I’ve had people refuse to believe me when I describe my lived experiences to them.
I refuse to add A Guy in a Geek Squad Short-Sleeved Button-Up to the list of people I allow to casually refuse to accept that I am an authority on the events of my own life.
If I say I didn’t drop the external hard drive, it means I didn’t drop the external hard drive. The service person in front of me is extraordinarily lucky that I know he is a working schlub and didn’t set the policy. Because this shit makes my fingers itch for a white-collared throat.
You still have to pay shipping costs
Free returns and exchanges are getting slightly more common, but these are still the exception, not the rule. And if you’re buying from a big box store, you can usually drop off returns in-person.
But for many online purchases, you’re stuck paying for shipping to return, exchange, or repair an item. And I’m always surprised by how expensive shipping is! The post office has the audacity to charge $8 for a padded envelope. Shipping a large box can cost $40 or more. I shudder to think of the hassle and cost of trying to return something like a dishwasher.
Please don’t ask how much that damn printer cost me to return. Yes, I had to pay it out of pocket.
Warranties can encourage you to be reckless
Do you know why football has become so dangerous? It’s the padding. It makes the players feel invincible and encourages them to hit much harder than they ever would if they were playing in jeans and a t-shirt.
Warranties can work the same way. You may unconsciously think you can afford to be reckless because you know repairs on the item are covered. Even if user damage is covered, this still isn’t a good way to treat your belongings. Or anything in your life, really!
I’m with Marie Kondo on this one. If you love an item, and that item provides you with utility, treat it respectfully and don’t throw it around.
Money is not a good cure for anxiety
Being anxious about the future can lead you to assume the worst and shell out money to insulate yourself from said worst. Retailers know this and will appeal to your anxiety if it makes them money.
Just because you can imagine a scenario in which something breaks and you needed it under warranty doesn’t make buying the warranty a good idea. A warranty does not guarantee that the bad thing won’t happen. And for all the reasons listed above, it’s frequently just a waste of money.
You may already be covered
Many products already come with a manufacturer’s guarantee, which covers defects and other such issues. Third-party warrantees may sit uselessly on top of existing coverage. Catastrophic stuff, like damage from weather or a natural disaster, may be covered by homeowner’s, renter’s, or car insurance.
Finally, the world is full of amazing angels and will take your out-of-warranty item back anyway. “So it looks like your AppleCare expired two months ago,” one such Genius informed me. When he saw panic light my poor-ass eyes, he winked and took it around back anyway. “It’s an easy fix, don’t worry about it this time.”
Despite the generally skeptical and cynical tone of this article, you have to remember that people are generally good. Most people are kind and helpful, especially when it costs them little to be so.
Are there any exceptions to the no warranties rule?
Of course there are. Depending on your lifestyle, there may be many exceptions.
Here’s the thing: It’s my experience that there are some people who own some products for which it would be wise to have additional protections. But it’s too much unpaid labor to read through the minutia of individual contracts, research out-of-pocket repair costs, and anticipate what your future needs will be that it isn’t worth the time or effort it takes.
I personally have had AppleCare, and would think about getting it again. A computer is the only tool I need to perform the work that feeds my family. It’s the only thing I own that’s both very expensive and absolutely crippling to be without. Depending on the machine and the terms, it has variously been worth it or not worth it for me in the past.
Think about your lifestyle and do your research. But remember the flowchart and always err on the side of “no.”
8 thoughts to “This Flowchart Tells You When You Need Extended Warranties”
I used to sell these when I worked at RadioShack; it sucked because I knew it was rarely worth it. There were a couple products where I’d actually see it used pretty consistently but by and large they were not necessary.
Perfect flow chart.
I agree totally with your flow chart!
My Dad used to sell insurance, and he taught me that insurance should only ever be used for potentially catastrophic expenses, as there is always a profit taken by the insurance company, meaning that almost everyone who buys insurance is going to lose financially. Home insurance to rebuild your very expensive home if it burns down? Yes. Extended warrantee to replace the $10 ear buds that you could easily afford to replace? Absolutely not, never, noooo.
Never really thought about it in depth, I guess I’m just a risk taker, I never get the warranty 🙂 But it makes perfect sense explained this way. It’s like gambling, sometimes you get a big payout, but the house always wins in the end.
I had a feeling I knew the answer before I reached the flowchart, but you better believe that baby is saved for future use!
I would also mention that many consumer purchases may be covered by a warranty from the credit card company used to make the purchase. Just another reason I love my travel hacking hobby!
Yeah, these things are just an upsell for retailers.
My guideline is that we buy insurance for big things (healthcare, house, car-caused-liability, etc.) Everything else, we just self insure.
I just dropped the insurance on my cell phone. That extra $13/month is going to come in handy for something.
I’ll just rely on renter’s insurance for my laptop, and everything else is replaceable.
Terrific! I am so pleased with you.