Are Extended Service Plans for Electronics Ever Worth It?

[baggins]

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If so, for what products? Laptops, MP3 players? Cost is usually in the 10-20% range.

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Never, EVER.

Nearly all electronic devices feature one thing: If they are going to fail, they will fail within the first 90 days, or virtually not at all.

AB

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not true. lots of things break long after the first 90 days. this phrase is what people use to smugly make themselves feel better for not buying the ESP.

i sell performance guarantees in my sales job at a music store. I think they are often worth it. and i am usually the #1 guy in the store as far as sales numbers on ESP's.

sure, there's profit in selling them. that's why we sell them. but there's profit in selling the guitar or the drumset, too. otherwise we wouldn't be in business. when i pitch them, i am not pushy, but i usually just make sure that the customer knows exactly what IT and ISN'T covered under the manufacturer's warranty, and tell them what our ESP covers, and for how long. ours are worth it on a lot of items. they don't cover stupidity like smashing it against a wall or soaking it in the bathtub, but humidity issues, cracks, electronic malfunctions, power surges, neck warpage and shipping are all covered under our warranty. anything under $200 costs $20 to cover for 2 years and its an automatic replacement. i've seen lots of people use them, and lots of other people not use them. i've seen only a handful of people try to use them, and the insurance company that handles claims will deny their claim. often we go the extra mile to sill fix the customer's problem and make them happy.

my personal challenge is to see how many ESP's i can sell on items that have a lifetime warranty. they're actually quite easy. they cover everything the manufacturer doesn't cover, including shipping, for 10 years. most people don't take them, but quite a few do.

i've even had some people be so thrilled with the idea that they buy them on stuff they've recently purchased within 30 days and WEREN'T offered the ESP originally by the salesperson.

in the end, it is really a personal choice. if the hassle of replacing or repairing the item through the manufacturer (which often includes a turnaround of months or longer) is not worth it to you, then sometimes these plans are worth it.

i also purchase them. i have one on my desktop i bought from bestbuy. the service plan includes geek squad tech suppport driving to my house to fix the problem, should the need arise. i can hang with that.

also, if you try the scheme in the link above with me, i will just return the price to the original tagged price. but our environment is a bit different. i don't just help you decide what to purchase and then turn you over to 3 different people who will carry your purchase to your car and ring you up and all that. i walk you through the entire process myself, often carrying your purchase out myself. it's just good business.

and i will occasionally reduce the price of the item to help you purchase the ESP. but never the price of the ESP.

[fmxda]

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For some people it is a practical consideration. Say you are getting a laptop for school and can afford the extra $150 for the insurance, but there is no way in hell you will ever be able to afford the $1500 if the thing completely breaks. Then maybe its worth it for you to take the -EV hit.

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This is an excellent point.

Speaking from an economics point of view, it might be +expectedutility to buy insurance (essentially what you are doing) depending on your tolerance for risk.

Simply put, your choice to buy extended service coverage would differ depending on the cost of the item you are insuring, your own personal wealth/income, the value you place on reliability, the cost of the plan, your own assessment of the probability that the thing will break, etc. Whether or not it is worth it is an individual decision, and there's no right or wrong answer.

[Burdzthewurd]

I got a one-year renewable warranty on a $60 discman I got at Best Buy back in 2002; long story short, I went through 5 discmans and was able to upgrade to $80 ones after the 3rd time. Worked for me, and it's not like I even had to beat the hell out of them either.

[mo42nyy]

they are a ripoff 99% of the time
its hilarious when people pay 15 dollars to insure 40 dollar products
however I use my laptop atleast 5-10 times more than the avg person and treat them like abaoslute crap
Additionally with Dell atleast you can add to the warranty at any point during the first year

[mbillie1]

Only if it's insurance on cell phones, since they're much easier/more likely to break and the "warranty" on them is as useful as a paper hat in an air raid

[Blarg]

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Only if it's insurance on cell phones, since they're much easier/more likely to break and the "warranty" on them is as useful as a paper hat in an air raid

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This sounds pretty questionable.

[mbillie1]

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Only if it's insurance on cell phones, since they're much easier/more likely to break and the "warranty" on them is as useful as a paper hat in an air raid

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This sounds pretty questionable.

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What's questionable about it? You carry it around, hence it's more likely to get dropped than a larger, less frequently used or more stationary piece of electronics. If it breaks it's almost impossible to fix and the manufacturer's warranty is generally voided if there is any physical damage to the device.

[SharpObject]

The percentage calculations of these plans are actually a little less than they seem, because most electronics will depreciate greatly half way through year 2 on your plan the TV is going to worth atleast 10% to 20% less than when you originally purchased it. This doesn't exactly translate because some replacements will be worth more or less if you upgrade etc.

[econophile]

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I get pissed off just thinking about extended service plans.
I find the concept insulting as a consumer.
If you sell it, stand behind it.
How can any store justify selling a product, and then question the product's reliability?
IMO, that's what all the extended plans amount to.
If a store decides a product should have an extended warranty, then the store shouldn't carry the cheap piece of crap.

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Yeah, whenever those Best Buy cashiers pitch me some overpriced warranty, I always have half a mind to ask incredulously "You mean this thing is going to break?!?!"

A couple weeks ago, they tried to sell me a warranty for a nintendo controller, which are indestructable.

[TheJackyl]

I think the regular extended warranties aren't worth it, but I recently bought a new laptop and bought the best buy 3 year accidental protection plan. It covers stupid things like if I spill something on it, drop it down the stairs. Pretty much anything that could happen to it, they will fix/replace it as long as it doesn't look like it was intentional (like I hit it with a hammer - sales guys example). I carry mine everywhere and beat the hell out of it. So 2 days and 11 months from the purchase date, I might happen to eat breakfast and accidentally spill my orange juice on it while its on.