Should you buy extended warranties for home appliances or not?
In today's home appliance consumer market, we often face a choice: whether to click the link and purchase an extended warranty service for household appliances. Today, let's delve deep into the matter of extended warranties for home appliances.
Extended warranty, in simple terms, means extending the warranty period of household appliances. It is a service provided after the original warranty period of the product ends, and consumers need to pay extra to purchase it. When we are selecting household appliances in the mall and the salesperson enthusiastically recommends the extended warranty service, many people will be in a dilemma: Should we buy it or not? And what is the basis for making this decision?
For different household appliances and different extended warranty periods, the cost rate is generally between 5% and 20%. To determine whether it is cost - effective to purchase an extended warranty, the core issue lies in understanding the failure ratio of the product within its normal service life. This needs to start with two key figures.
The first figure is 2%. Based on the overall average situation, for well - known brand household appliances, the customer complaint rate should be lower than 2% within the one - year warranty period. A well - known international large enterprise has conducted statistics on the sales data of tens of millions of household appliances globally (excluding the United States because of its unconditional return policy). For simple household appliances like electric kettles, the complaint rate within the one - year warranty period is only about 0.5%. This is because the structure of an electric kettle is relatively simple. Its main function is to boil water, the technology is mature, and there are few components, so the probability of malfunction is naturally low. For relatively more complex products such as upright vacuum cleaners, the complaint rate is around 1.0%. It involves multiple components such as the motor, suction duct, and filtration system. Any problem with one of these components may lead to product malfunction. However, for some high - end products with low production volume and high complexity, the complaint rate may exceed 20%. As for why the complaint rate of high - end products is so high, a detailed explanation can be found in the article "Is a 5,000 - yuan coffee maker necessarily of better quality than a 1,000 - yuan one?" High - end products often integrate more advanced technologies and complex functions. While this enhances the product's performance, it also increases the risk of malfunctions.
The second figure is 0.5%. Naturally, we may wonder if the failure rate of household appliances remains the same every year. The answer is no. The reliability model of most household appliances follows a bathtub curve. From this curve, we can see that the probability of product failure is highest in the early stage and near the expected lifespan. In the early stage, some latent defects in the production process may gradually surface during the initial use. When approaching the expected lifespan, components are severely worn after long - term use, making them prone to malfunctions.
Most electrical appliances come with a one - year free repair and parts replacement service. The extended warranty service purchased by consumers falls precisely within the lifecycle stage when the product is least likely to fail. That is, after the one - year warranty period but before reaching the expected lifespan, during which the product quality is relatively stable.For example, if you buy a vacuum cleaner and spend 5% of the product price on a two - year extended warranty service. In fact, the probability of this vacuum cleaner failing within these two years is far lower than 5%, perhaps only 0.5% or even lower.
Next, let's analyze from the perspective of merchants' profits. According to public reports in the United States, Best Buy, one of the largest home - appliance retail enterprises in the United States, has an unknown secret: the profit from the extended warranty service provided by the company is even higher than the profit from selling the products themselves. The profit margin of the extended warranty is approximately between 50% and 60%, which is 18 times the profit of the products themselves. The profit from the extended warranty even accounts for 45% of the operating profit. This fully shows that for merchants, the extended warranty is a very profitable business.
It should be noted that the bathtub curve is not very applicable to electronic products. Electronic products are updated rapidly, and technology iterates frequently. The pattern of their failure occurrence is different from that of traditional household appliances. In addition, the extended warranty periods provided by merchants for different household appliances also vary. For example, for refrigerators, merchants may offer an extended warranty service for 6 years, while for vacuum cleaners, the maximum extended warranty service is only 2 years. This actually reflects that after this extended warranty period, the probability of problems occurring with this type of product will gradually increase. Consumers can also infer the failure probability of this type of product based on the proportion of the extended warranty cost.
The principle of purchasing extended warranty is the same as that of buying insurance, and both require considering the input - output ratio. Insurance companies are more willing to sell disease insurance to healthy young people because their probability of getting sick is relatively low. The same goes for home appliance sellers. The extended warranty period is the most stable stage for home appliances, so selling extended warranties is a sure - profit business for them. For consumers, whether to purchase an extended warranty can only be decided based on their own risk - bearing capacity.
Attentive consumers may also notice that among multiple products of the same company, some come with extended warranties while others don't. Are the products without extended warranties usually high - end ones or regular ones? The reasons behind this are worth our careful consideration. Consumers don't necessarily have to purchase extended warranties. However, when they encounter a situation where some products have extended warranties and others don't, they need to think more about why a particular product doesn't offer such a service.
In fact, not only home appliances but also cars have extended warranties, and their principles are similar. When faced with extended warranty services, consumers need to comprehensively consider multiple factors and make decisions carefully.