My about face on extended warranties

May 12, 2005

broken_plasmaI’ve never been a big fan of extended warranties. It’s not that I feel they aren’t warranted (droll I know) it’s just that good consumer electronics have, for lack of a better term, a shelf-life that rarely (In my experience at least) outlives the included manufacturers warranty. Sure now and again you purchase something that you absolutely love, and want to keep forever and it fails on you, but rarely in my opinion was is it worth another hundred dollars or so to purchase that what-if insurance an extended warranty provides.

Well as it turns out, some circumstances we’ve experienced in our custom A/V business, has given me cause to re-examine my entire extended warranty philosophy. Earlier this year we completed an install for a client, who purchased three plasma televisions from us. Those sets included a 61” for his home theater, 50” for the family room, and a 42” for the master bedroom. I was somewhat shocked to hear that one of his plasmas had developed a vertical blue line down the right quarter of the display, especially surprised since I couldn’t even remember the last time we’d had a plasma fail.

Imagine my surprise when, about a month later, the same customer had another plasma fail, (I won’t bother naming the make and model, as I feel the company’s past track record more than makes up for our current predicament) I began to wonder if there was any possibility our installation methods were at fault. I’m happy to say, or is it saddened to say, that we exhausted every far fetched scenario we could dream up, where we could possibly be at fault with these failed plasmas. It appeared as if we’d just had a run of bad luck, and with that we set out on obtaining replacements for our fallen comrades. This is where the story gets comically sad.

Perhaps through good luck, or a general naivety to this particular manufactures replacement policies, we thought hey we’ll put in a return authorization call and worst case scenario we’ll have the plasma’s back in place within a week or so. Far from it, try three weeks return trip on for size. Yeah three weeks for repair from the time they received the plasma until we could expect it back in our shop. Needless to say our customer was less than ecstatic. Here he was with two plasmas that had failed in less than a two month period, and he’d be staring at a wall bracket with some cables dangling out, for another 3 weeks.

Now listen, I’d hate to leave the impression we’re a bunch of amateurs unaccustomed to failed consumer electronic products. I’ve seen things DOA out of the box and units die after months of reliable service for no apparent reason. But in all honesty none of us could remember having a plasma fail, much less three in two months, so chalk this one up to a lesson learned the hard way. We went ahead and purchased our customer a new plasma for his bedroom and sent the other off for repair, fairly reasonable solution in my opinion but the story doesn’t end there. Oh how I wish it had though.

About a week after the two-plasma debacle, we get a call from another long time customer informing us, you guessed it, his 42” (different manufacturer) plasma had quit working. What the hell isn’t exactly what we collectively yelled out, but it’s close. Ok this wasn’t specific to a certain manufacturer, it wasn’t even specific to one install, but how could we run into three failed plasmas in the span of two months? This was almost funny, almost.

You see when a piece of gear as expensive as flat panel television fails, the integrator basically has two options, and neither one are very pretty. The integrator can either buy a replacement unit on their dime or be subjected to manufacturers often painfully, slow replacement process; the later option rarely makes for a happy customer. So the first solution is often the only viable choice, as referrals seem to magically wither away when through no fault of our own, equipment dies.

Let me dispel one rumor custom A/V integrators loathe about our business, we don’t make 40 or 50 points on every product we sell. Heck if we did the custom A/V industry as a whole would be a very different animal. I’d probably get a raise for one thing! But getting back to the point. Video products in general have a substantially smaller margin, than audio equipment, sometimes depending on the make, as little as 20 points. So here we are faced with replacing a product, we honestly didn’t make much profit on to begin with, out of our pocket and then later get a repaired unit back that we can’t sell as new, i.e. double whammy.

Ok believe it or not, I did have a point to make in all of this. Extended warranties, I’ve now come to realize, are well worth it on certain products. You see, we would have been well within our rights to inform our customer “you’ll be without a television for three weeks” but most people don’t want to hear that sort of thing after spending several thousand dollars.

So unless you just happen to be purchasing that next flat-screen from an integrator or retailer who goes the extra mile as we do, I strongly suggest at least investigating what extended warranty is available with your new purchase. As a matter of fact, we’ve instituted a new policy at our firm. We now all but insist new flat screen purchases included an extended warranty and if the customer declines, we bluntly inform them of the consequences. This may seem a little harsh, but we’re not talking about $300.00 DVD players that can be considered almost disposable, in the scope of a larger project. We’re talking about a display that on average sells for four thousand dollars or more.

Let me clarify exactly what I mean when I say “Extended Warranty”. I’m not talking about the generic; add another year or two onto the manufacturer’s warranty. I’m talking about the super whiz bang “we’ll replace the entire unit on the spot” type of warranty. This type of plan is where the real value comes into play, anything else and you’re still without your unit if it should fail. Sadly this, more often than not, isn’t what is offered by the major retailers. Read the fine print on your extended warranty, they’re not all the same.

As a part of these growing pains, I’ve also begun investigating the replacement polices themselves. For instance, not all manufacturers offer in home service (ala the three week turn around). Given this we may even begin to drop certain manufacturers from our line-card and add the ones we feel offer superior service. Take Pioneer for example, we don’t currently offer their products but that may change. Pioneer offers the industry standard one-year parts and labor on their Plasma’s, but the critical difference with Pioneer is that one year includes in-home service.

In-home service in my opinion often facilitates a much quicker turn around time for the end user, not to mention it makes the integrator mucho happy that he/she doesn’t have to come out and haul a hundred pound, 61” plasma off the wall and deliver it to the service center.

In the end both consumer and reseller have to be more aware that equipment can and does fail. As I stated before I’ve already begun to push extended warranties, even if I have to sell them at our cost. I still wouldn’t recommend a $50.00 extended warranty on a $300.00 DVD player, its just plain silly. This type of product often outlasts the included warranty, but at the very least I’ll strongly recommend them on displays and front end equipment that exceeds the 2k mark.

Posted by Bryan Greenway | | Filed Under Commentary