akirk Posted August 23, 2004 Share Posted August 23, 2004 This question is for those of you who work or have worked for Best Buy, Circuit City, etc. When you buy something like a a TV, computer, speakers, etc, why do the employees try so hard to sell you an extended warranty? Do they get a commission or percentage of the extended warranty for themselves? It's hard to me to believe that they are trying that hard just because their boss tells them to. I have to believe that there is something in it for them. I wonder what percentage of revenues extended warranties represent for Best Buy? I never purchase extended warranties - I figure if it is such a good deal for them it must be a bad deal for me. Quote Link to comment Share on other sites More sharing options...
Griffinator Posted August 23, 2004 Share Posted August 23, 2004 ---------------- On 8/23/2004 8:20:18 AM akirk wrote: This question is for those of you who work or have worked for Best Buy, Circuit City, etc. When you buy something like a a TV, computer, speakers, etc, why do the employees try so hard to sell you an extended warranty? Do they get a commission or percentage of the extended warranty for themselves? It's hard to me to believe that they are trying that hard just because their boss tells them to. I have to believe that there is something in it for them. I wonder what percentage of revenues extended warranties represent for Best Buy? I never purchase extended warranties - I figure if it is such a good deal for them it must be a bad deal for me. ---------------- I worked there for two years. I never got a penny in bonus for the extended warranties I sold. The basic motivation for hard selling the warranties, the expensive accessories, and the "digital subscriptions" they offer is simple: If you don't, they'll fire you. Quote Link to comment Share on other sites More sharing options...
colterphoto1 Posted August 23, 2004 Share Posted August 23, 2004 IMHO, most insurance is nothing more than legalized gambling. You are betting your premium against the cost of something catastrophic happening. Unfortunately, just like Vegas, the odds are stacked in favor of the house. Just look at the skyline of any major city in America. Who owns the big buildings? Insurance Companies- proving that on average they will win. The only reason to purchase insurance is if you absolutely cannot deal with the result of the catastrophic incident. Extended warranties on consumer electronics are a major profit maker for stores like Best Buys, et al. That is why employee policy is that they must make an attempt to sell it to you. While I'm rambling, how bout parking meters? Am I betting my $.25 against the $17 fine that I'll get back in time?? Just an observation. Quote Link to comment Share on other sites More sharing options...
neomartic Posted August 23, 2004 Share Posted August 23, 2004 I worked once worked at a store that sold warranties with their products and sometimes we got things back days before warranties were up. For instance, a CD burner came back after 2 years and 360 days of use because it "broke all on its own." The customer said the tray wouldn't eject. We tested it and it wouldn't so the customer got a gift card for the price he originally paid for the burner and he put that toward a new, better one. Obviously we'd been had, but there wasn't anything we could do, with the lenient manager we had, at least. So... in closing I'd just like to say that even though I rarely purchase the extended warranty, it could be handy, depending on where you bought the product and what kind of person you are. I got my Ultras by burning up my 4.1s and returning them to Bust Buy for a credit toward the Ultras, but that's just because the Ultras are amazing and I hate Bust Buy. Quote Link to comment Share on other sites More sharing options...
boomac Posted August 23, 2004 Share Posted August 23, 2004 The key to whether an extended warranty is worth the purchase is to compare the cost of the warranty vs. the cost of the item. A $500 extended warranty on a $15,000 marine engine is not a bad buy but a $50 warranty on a $189 DVD player is. 03% of item cost vs. 26%. The only one I've ever bought was on a computer. They will negotiate the price and on a couple occasions, I have been happy I had one. Quote Link to comment Share on other sites More sharing options...
Jabez Scratch Posted August 23, 2004 Share Posted August 23, 2004 ---------------- On 8/23/2004 8:20:18 AM akirk wrote: This question is for those of you who work or have worked for Best Buy, Circuit City, etc. When you buy something like a a TV, computer, speakers, etc, why do the employees try so hard to sell you an extended warranty?---------------- Extended warranties are the cruel joke of the consumer electronics industry. You are never supposed to buy an extended warranty. Extended warranty is a euphemism for rip-off. Quote Link to comment Share on other sites More sharing options...
neomartic Posted August 23, 2004 Share Posted August 23, 2004 I agree to an extent. Though your examples are excellent and I would definately agree with the marine engine, I think it is more important to compare the cost of fixing the item, with the cost of the warranty. Keep in mind the most common repairs and if they cost more than the warranty, I'd say it would be a good buy. In any case it is best to do your research on products before you make your purchases and to know how costly the common repairs are and also how frequent. Quote Link to comment Share on other sites More sharing options...
toddvj Posted August 23, 2004 Share Posted August 23, 2004 The more expensive the warranty, the more likely the item in question is to break. I buy them sometimes and sometimes not. I bought a 4 year warranty from best buy on a $600 deck for my car for $40. I dropped the face plate, and I took it to Best Buy. They took the deck out, put my old one in, Replaced a $130.00 part, and re-installed the unit after it was repaired. That was $40 well spent. I have replaced 3 cell phones in the last 2 years with my replacement plans, all I've had to do is buy a new replacement plan on the new phone. If you own a RPTV and you don't have a warranty on it, good luck. Chances are SOMETHING will need to be repaired in the next 4-5 years, unless you are just plain lucky. I don't buy them on speakers because they usually have a 5 year warranty anyway. If you don't want it, just tell the salesperson NO. He's just doing his job, it's nothing against you personally. Quote Link to comment Share on other sites More sharing options...
Coytee Posted August 23, 2004 Share Posted August 23, 2004 Bought an extended plan on my new installation heating/air 5 years ago. Turned out to be good bet, they've been out every year fixing it. Long story short, we finally (they) figured out SLOW leak. they replaced the coils about 2 months ago. On aside, I use to work at Service Merchandise and the threat of fire was there too.. BUT... we also shared a bit in the sale. If we sold them, we'd get like 1% of the amount as commission (don't recall %, but it was just a token) Mix the token with threat of being fired, we didn't mind "showing them" to the customer. THAT said, (oh, I worked in the jewelry dept) if the cust DID buy it and something happened, we bent over backwards to fix it, even if it cost us more to "do it right" than "put it back to origional" (sometimes, a setting might need MORE than back to origional) That said again, if the cust did NOT do the warranty and something happened, we had it documented on their paperwork and wouldn't budge as far as price to fix it. "you can pay me now, or you can pay me later" now... the sneaky part... with the pressure over your head on your job... if a setting came back with a problem, I'd pull cust aside and say "it's going to cost say.. $100 to fix this, BUT, I can sell you that warranty you refused earlier for $50 and not only will that get it fixed, you'll have a year left" Of course, they bought it and my percentages went WAY up, because I got a point for a warranty but my item count didn't go up. Always a way around something huh? Quote Link to comment Share on other sites More sharing options...
Coytee Posted August 23, 2004 Share Posted August 23, 2004 Bought an extended plan on my new installation heating/air 5 years ago. Turned out to be good bet, they've been out every year fixing it. Long story short, we finally (they) figured out SLOW leak. they replaced the coils about 2 months ago. On aside, I use to work at Service Merchandise and the threat of fire was there too.. BUT... we also shared a bit in the sale. If we sold them, we'd get like 1% of the amount as commission (don't recall %, but it was just a token) Mix the token with threat of being fired, we didn't mind "showing them" to the customer. THAT said, (oh, I worked in the jewelry dept) if the cust DID buy it and something happened, we bent over backwards to fix it, even if it cost us more to "do it right" than "put it back to origional" (sometimes, a setting might need MORE than back to origional) That said again, if the cust did NOT do the warranty and something happened, we had it documented on their paperwork and wouldn't budge as far as price to fix it. "you can pay me now, or you can pay me later" now... the sneaky part... with the pressure over your head on your job... if a setting came back with a problem, I'd pull cust aside and say "it's going to cost say.. $100 to fix this, BUT, I can sell you that warranty you refused earlier for $50 and not only will that get it fixed, you'll have a year left" Of course, they bought it and my percentages went WAY up, because I got a point for a warranty but my item count didn't go up. Always a way around something huh? Quote Link to comment Share on other sites More sharing options...
IndyKlipschFan Posted August 23, 2004 Share Posted August 23, 2004 Insure the big things in yoru life.. House, cars, and your life, health, for remaining loved ones. Take big deductables to get better rates and enjoy your life too. Simple Insurance 101. And a 2k ____ whatever it is to the left.. Will not hurt you in life. But mechanical things will break down. I also agree a furnace especially one brand new..(to tweek it) And a furnace/ ac over say 10 years is also a good idea. I think I pay + - $ 100.00 a year to have em come out clean everything and or look for problems 2 times a year. So what 50 dollars? I have never had to repair any parts, nock on wood, but I know it is all lubed up, and cleaned out. I have the house cool in the summer and warm in the winter no problems. Copiers in your office are also a good thing to have a maintenance agreement on too. Quote Link to comment Share on other sites More sharing options...
xcjago Posted August 23, 2004 Share Posted August 23, 2004 I'm not gonna get into this too much because I know it can turn into a big soap opera. But, having worked in retail, I can tell you that extended warranties are not always a rip off. Like someone else before me just said, it all depends on the price. I once asked a customer if he would buy a two year extended warranty for his $2,000 computer that he was buying if the warranty cost $20. He said no. I think that's just dumb. I find it funny how passionate people can be against buying warranties. And I always laugh when they come crying to the store six months later because their product broke and they didn't buy the warranty. They say things like, "We'll I bought it here, why can't I return it?" Or, "I bought it from you guys, why won't you fix it?" They don't seem to understand that we are the retailer, not the manufacturer. We tell them that they have to send it to the manufacturer and they cry about it. Quote Link to comment Share on other sites More sharing options...
Griffinator Posted August 24, 2004 Share Posted August 24, 2004 ---------------- On 8/23/2004 11:55:32 PM xcjago wrote: I find it funny how passionate people can be against buying warranties. And I always laugh when they come crying to the store six months later because their product broke and they didn't buy the warranty. They say things like, "We'll I bought it here, why can't I return it?" Or, "I bought it from you guys, why won't you fix it?" They don't seem to understand that we are the retailer, not the manufacturer. We tell them that they have to send it to the manufacturer and they cry about it. ---------------- The really funny ones are the wal-mart types that come in expecting the product to last forever, when they're paying next to nothing for it. One guy I talked to on the phone bought an el-cheapo RCA 27" from me a while back - 1 year, 1 day after he purchased it the thing quit. He called up the store asking me what we were going to do about it. I said "there's nothing we can do - the warranty is 1 yr parts, 90 days labor" - he starts talking about the "Canadian warranty" listed in the manual - which is 2 years parts and labor. I had to patiently explain to him that this warranty only applies to RCA TV's purchased in Canada. He was doing everything he could to try and get me to say we'd do something for him - i wasn't budging - I remember what a jerk he was when he came in and bought that TV, and I was enjoying every minute of it.... Quote Link to comment Share on other sites More sharing options...
Mighty Favog Posted August 24, 2004 Share Posted August 24, 2004 Griff- I might also add that there is an actual point in time when the product becomes the property of the customer and the store no longer has anything to do with it. This was great when I was a gun dealer for a pretty big dept. store from 83' to 96'. That store had everything (and excellent lines of) from carpet to pet food to hardware to TVs to auto parts to whatever. For instance I could go over to the auto dept and build a complete engine short of the block. But anyway, any gun that was sold stayed that way. No returns, ever. Once the gun left the building it was not my problem. The only thing I would do is pay for shipping back to the manufacturer or importer to have it fixed. I remember one lady bringing in her husband's duty weapon from when he was a policeman. She wanted to return it. I would have nothing to do with it. She insisted that he was a cop and strongly suggested that all cops are honest people (I know better) so there is no reason why I should not take it back. She finally got me ticked off to the point that I told her that I didn't know who's face it was pointed in, if it was, to commit what crime. She gave me a look that.... well, if she had ammo for that gun at the time.... Quote Link to comment Share on other sites More sharing options...
v3spitfire Posted August 24, 2004 Share Posted August 24, 2004 Best buy is a complete rip off when it comes to extended warranties. They don't intend to honor them. I bought a nakamichi receiver for a 2nd room from them and bought the warranty. 16 mos into it, the remote stopped working. I took it in and their response was that that wasn't a core part of the component. When I explained that 1/3 of the functionality was only on the remote the agreed.... 3 months later they were still unable to get the part replaced since the no longer carried Nak. The left me a voicemail (best buy waranty service center) saying that I should deal directly with Nakamichi (the manf warranty had alread expired). I was so pissed, I went right over there with the unit and wouldn't leave the line until I ended up with a replacement unit, which turned out to be a Yamaha. The fact that it took me 3 months and a phone call to get me mad enough to do something makes me madder at myself than them. I vowed never to buy anything there again. The next month I bought this computer from them. Come to think of it, I guess I got what I deserve. Quote Link to comment Share on other sites More sharing options...
Griffinator Posted August 25, 2004 Share Posted August 25, 2004 BB has changed their policy about remotes - if the remote goes, it gets replaced, no matter what they have to do to get the replacement. Quote Link to comment Share on other sites More sharing options...
troostj Posted August 26, 2004 Share Posted August 26, 2004 Thats why I buy all my klipsch product online! i dont need the warranty!!!! j/k Quote Link to comment Share on other sites More sharing options...
troostj Posted August 26, 2004 Share Posted August 26, 2004 Thats why I buy all my klipsch product online! i dont need the warranty!!!! j/k Quote Link to comment Share on other sites More sharing options...
Strabo Posted August 26, 2004 Share Posted August 26, 2004 I worked a couple of years at the BBY headquarters and the reason they push the warranties is because it creates huge profits for them. The profit on warranties are as high if not higher than the margin they make on the sale of the item. In a nut shell, they double their profit (or better) on each sale of whatever doo-dad every time a warranty is sold. Example, they sell a $1,000 Whats-It plus a $140 5 year warranty. The margin dollars on the Whats-It are $100 and the margin dollars on the warranty are $100. They just doubled their profit by selling a sense of security. Quote Link to comment Share on other sites More sharing options...
gcoker Posted August 26, 2004 Share Posted August 26, 2004 The only point I will make is that warrenties are like insurance. They count on more people paying in then they expend on repairs and keep the rest. The amount they charge is directly related to the risk on the item needing repair. Quote Link to comment Share on other sites More sharing options...
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