does HF have stores just to push extend warranty

[Donald]

I know lots of places have extended warranties. But HF seems to have them on everything. I bought a solar pond pump yesterday for $15.98 and they asked if I wanted an extended warranty for $9.98. Cannot remember if it was for a few years or the life span of the universe. The cost was more than 1/2 the cost of the product. Absurd. In some stores (Sears for example) the employees get a decent % cut on the sale of the extended warranties, so they are pushed.

 

[ahoier]

Don't know what "HF" is, but I know the couple large ticket purchases I've made at my local Walmart, and Target stores, have offered me an extended warranty, typically 1-2 years...the kicker is though (at least for WM), during the first 90 days, you can take the product back to your local WM, after 90 days, and up until the manufacturers "limited warranty" you must go through the manufacturer where they typically "RMA" you a new product, and you mail them back the old/borken product, typically in the same box, though sometimes they'll have you turn the box inside out; or at least peel off the shipping labels, and put the "new" RMA labels over top of theirs.


So either way, you aren't paying for shipping charges which is cool.


I know at Wm they don't give out commission....obviously

 

[Letter_K]

HF = Harbor Freight. All retailers do it because it because the extended warranties are almost pure profit. Same for why they often push their credit cards too. Sears at one time made most of their profit from their credit card operations.

Best Buy has been reported to make most of their profit from extended warranties. The mark up on the electronics covers the cost of goods sold, wages and overhead and the profit is from extended warranties.

The good rule of thumb is not to insure something that you can handle paying for replacement. None of these store policies are worth it. Of course, someone will come along and say they benefitted and odds are, someone has to, but most don't get any benefit from the warranties.

Good example are Flatscreen HDTVs. They are reported to have a 3% breakage rate and probably a 20% warranty cost to cover 2-3 years. That money you paid goes to cover repairs/replacements ( which get cheaper over time), overhead and most of it goes to profits.

 

[Astro14]

Insurance is a way to distribute the risk. So, if you can absorb the cost of the risk (self insure) then you are better off doing so, since you save the transaction cost (including commission and admin) in that instance.

Since commission alone is often 50% of extended warranty products, and the admin is in there too, the real risk - the real odds of the item failing x cost of replacement is much less than half of the extended warranty....so self-insurance on an inexpensive item makes a lot of sense.

naturally, on your life, home, or car, you should have insurance, but the commission and other transaction costs on those products are a much, much lower percentage...and few of us can afford to replace those things out of pocket...

 

[scurvy]

Originally Posted By: Donald
I know lots of places have extended warranties. But HF seems to have them on everything.
...
In some stores (Sears for example) the employees get a decent % cut on the sale of the extended warranties, so they are pushed.


I'm sure the employee / manager / store / district all get a nice cut of the extended warranties and the cashiers are coached on pushing the warranty on every product that has one available... and it seems most of them do from my experience as well. Probably also extra bonuses for certain metrics with warranties sold.

 

[eljefino]

I got some headphones at radio shack for $19.95, the salesman tried pushing a warranty for... $19.95!!! With a straight face!

He said I could deliberately smash them, repeatedly, and come out ahead.

 

[EricF]

radio shack is the worst offender of extended warranties.. theirs is so high because the salesman gets a commission off that as well and it also makes the store look super good.
AND if you have the use the extended warranty, you must have your receipt or else you're out of luck.
AND the radio shack merely UPS's it to the repair depot and you get to wait forever for it to get repaired.