Strabo Posted August 26, 2004 Share Posted August 26, 2004 ---------------- On 8/26/2004 2:52:37 PM gcoker wrote: The amount they charge is directly related to the risk on the item needing repair. ---------------- Sure, in the highly regulated insurance industry, but not in retail. In retail, they treat insurance contracts just like pallets of DVD players. They mark them up. Only the markup is sometimes 100 - 200% of the cost verses the 10% they make on an actual component. Some highly competitive departments are priced at or near cost with their entire margin made up from warranty revenues. Other not so competitieve departments are the opposite. Quote Link to comment Share on other sites More sharing options...
v3spitfire Posted August 26, 2004 Share Posted August 26, 2004 I'de be ok with these over priced warranties if they would always honor them. When I was in 8th grade, I bought a turntable at Ollie Fretter (like a scaled down best buy with flambuoyant adds). I had like 4 salesman telling me I need the warrante $40 on a $200 turntable. I bought under pressure. 2 years later one of the wires connecting the tone arm to the cartridge broke. The guy said it wasn't covered, I because the wire was not an intrigal part of the turntable. He told me how to fix it...That was nice of him. I was just a kid, too embarassed to tell my dad. Later the same salesman tried to sell me a $5 dollar warranty on $6 joystick. After a couple hours involving high math, I realized that this may not be a good deal for one of us.... Lucky in 8th grade I had a high paying paper route. Quote Link to comment Share on other sites More sharing options...
Indyjeep Posted August 26, 2004 Share Posted August 26, 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. ---------------- I agree there. Working at a retailer like Best Buy can change your whole perspective on things. Ive had ppl get all mad at me because their product went bad 5 months after they had it and the manufacturers warranty is only 90 days parts and labor. And they moan and groan to me at how they bought it from us so we should fix it cuz we sold it to them and its our fault that its defaulty. I than tell that customer that we are not " the manufacturer therefore we cannot fix it" I than ask if they were offered the service plan, if so than i tell them why they should have got it. Oh and Best Buy changed some stuff on the their Service plans like free preventive maintanence on all RPTVs(unlimited times in the 4 years) and they now cover the light bulb with the DLP and Projo LCD sets. Quote Link to comment Share on other sites More sharing options...
skonopa Posted August 27, 2004 Share Posted August 27, 2004 ---------------- On 8/26/2004 6:18:42 PM v3pcbl wrote: Later the same salesman tried to sell me a $5 dollar warranty on $6 joystick. After a couple hours involving high math, I realized that this may not be a good deal for one of us.... ---------------- Like the time when Sears tried to sell me an $8 warranty on a $12 hot-glue gun kit? Needless to say, I refused it. My take on service plans: I usually do the cost analysis myself. If it is a $100 item that I know is pretty reliable, but they want $50 for the warrenty, I will refuse it. I did opt for the extended warrenty on my car audio system. After spending a good $3,500 on that, I did not mind paying an additional $200 for the service plan, and it already paid for itself, since I did run into some problems with it. The head-unit basically crapped out, and they replace it, no questions asked. A $350 piece of equipment, not to mention other glitches that have come up. When I bought my lawn-mower, I bought the three-year extended warrenty on that, which included free annual service checks, which included blade sharpening and oil/filter changes. It is now eight years that I've had that lawn-mower, and it still starts on the first pull and runs like the day I bought it. In the case of computers, I usually do decline the extended warrenties for the simple fact that I have the expertise and the know-how to fix the things myself. As long as the manufactuer provides a good one-year parts warrenty, that is all I need. After that first year, it is a pretty good bet that I've upgraded most things in there anyway. Heck, just about every machine I've had for the past 6 years of so, I've built myself anyway. Quote Link to comment Share on other sites More sharing options...
Strabo Posted August 27, 2004 Share Posted August 27, 2004 To be clear, I'm not against warranties, or big box stores pushing warranties. I buy them myself in certain situations. My points were made to answer the original question, why do these stores push the warranties so hard? Simple, they make money. Quote Link to comment Share on other sites More sharing options...
toddvj Posted August 27, 2004 Share Posted August 27, 2004 ---------------- On 8/26/2004 3:55:28 PM Strabo wrote: ---------------- On 8/26/2004 2:52:37 PM gcoker wrote: The amount they charge is directly related to the risk on the item needing repair. ---------------- Sure, in the highly regulated insurance industry, but not in retail. In retail, they treat insurance contracts just like pallets of DVD players. They mark them up. Only the markup is sometimes 100 - 200% of the cost verses the 10% they make on an actual component. Some highly competitive departments are priced at or near cost with their entire margin made up from warranty revenues. Other not so competitieve departments are the opposite. ---------------- Try buying a 5 year warranty on a DVD player. It costs more than the player itself sometimes. Why? Because a DVD player is more likely to break than a Receiver. So, yes, the amount they charge IS directly related to the risk on the item needing repair. Of course companies make a profit on warranties, I don't think anyone here believes that they are selling them just as a service. Quote Link to comment Share on other sites More sharing options...
D-MAN Posted August 27, 2004 Share Posted August 27, 2004 The short answer is that most of it goes directly into the salesperson's paycheck. DM Quote Link to comment Share on other sites More sharing options...
toddvj Posted August 27, 2004 Share Posted August 27, 2004 ---------------- On 8/27/2004 5:05:19 PM D-MAN wrote: The short answer is that most of it goes directly into the salesperson's paycheck. DM ---------------- I bet all the salespeople out there wish THAT were true. In reality, they MAYBE get 10% of it. Quote Link to comment Share on other sites More sharing options...
D-MAN Posted August 27, 2004 Share Posted August 27, 2004 I can check with a salesperson buddy of mine to find out EXACTLY how much...I know that its FAR more than 10% though. DM Quote Link to comment Share on other sites More sharing options...
D-MAN Posted August 27, 2004 Share Posted August 27, 2004 He said that they change, it's down to 10% now, it used to be higher, and it varies from employer to employer... DM Quote Link to comment Share on other sites More sharing options...
xcjago Posted August 28, 2004 Share Posted August 28, 2004 LOL, 10 percent I WISH. I'm lucky if I get 5 percent. You want to know why we push it? Two reasons. If the store didn't sell it, they'd go bankrupt and if I didn't push it, I'd be fired. Is that simple enough for you?? Quote Link to comment Share on other sites More sharing options...
Griffinator Posted August 28, 2004 Share Posted August 28, 2004 ---------------- On 8/27/2004 5:29:37 PM D-MAN wrote: He said that they change, it's down to 10% now, it used to be higher, and it varies from employer to employer... DM ---------------- DM - what part of "I worked for BB for two years and never got a penny from selling these" do you not understand? I sold hundreds of service plans in that time period, and all I ever got from my boss was "why didn't you sell it on that one too?" Quote Link to comment Share on other sites More sharing options...
Indyjeep Posted August 29, 2004 Share Posted August 29, 2004 DM - what part of "I worked for BB for two years and never got a penny from selling these" do you not understand? I sold hundreds of service plans in that time period, and all I ever got from my boss was "why didn't you sell it on that one too?" ---------------- Agreed Quote Link to comment Share on other sites More sharing options...
Mighty Favog Posted August 29, 2004 Share Posted August 29, 2004 I bet the store managers get a piece of em'. The store I worked at had a very "hush hush" perk for the store managers. Whatever money the store managers DIDN'T spend on giving hours to the floor employees, the manager would get a piece of. Needless to say we were short handed quite a bit. Quote Link to comment Share on other sites More sharing options...
xcjago Posted August 30, 2004 Share Posted August 30, 2004 I think you're right about that. If the store hits the right numbers, the managers get a bonus. Where's my bonus?? Quote Link to comment Share on other sites More sharing options...
boomac Posted August 30, 2004 Share Posted August 30, 2004 I know this business pretty well. If I were a retailer, I'd probably self insure. That tell ya anything? Having said that, ya just need to use good judgement when presented with the choice. Sometimes it makes sense. Sometimes not. Now, do you think a salesman has ever heard, "ya didn't tell me I could buy a warrenty!" That's one of the reasons they make the offer but mostly they make it because it's their job! Quote Link to comment Share on other sites More sharing options...
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