Profitting from Your Fears
Apr 19 '00
There was a time, perhaps 20 or so years ago, where buying an extended warranty on a product was a good idea. High costs of manufacture of such items as washers, dryers, stoves, etc. during that time period made them items in which indeed extra protection was a wise move.
However, nowadays we are in a society that is based upon 'throw away' culture. The price of raw goods, combined with newer technology, has seen prices for many large appliances drop dramatically from the days of old. A good washing machine nowadays will run you about $300 versus $800 or more back in 1978.
Some will counter this argument by saying that since technology has made goods cheaper, they are more cheaply produced. This is not necessarily so. Many large appliances nowadays are built to withstand conditions that would have ruined an appliance, such as a washer, years ago. Many larger appliances have a built-in microprocessor that does everything from monitor the time of day to alert you if a load is unbalanced or if your dryer needs its lint filter cleaned.
Therefore you must ask yourself, is it worth it for me to purchase an extended service contract? Typically you would pay about $50 - $75 for a contract on a $300 item. This may last for an additional two to three years past manufacturers warranty (a side item to ask yourself is, if manufacturers are pushing these contracts so hard, is that saying something about the QUALITY of their product?).
The bottomline to always remember in situations such as this is, the store would not be selling it if it were not making a profit. Industry figures show that extended service contracts are, by far, one of the largest profit makers for the industry. Why? Typically people either forget they purchased one or just buy a new appliance should the old one break down.
In the longrun, I just don't see an extended warranty contract a viable option on large appliances nowadays. The quantity and quality of such appliances has increased dramatically since the days when you had to sit there and watch the machine for fear it might tip over!
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dmxrob
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Location: Mid Missouri
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Computer programmer from the midwest.
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