Free Warranties

My wife bought a new computer today at Staples.  When the sales person offered the 2-year extended warranty, she was ready to turn it down, but then he said that Staples has a new policy: if you don’t use the warranty, you get the price refunded!  That means that there’s  nothing to lose; don’t we wish that all of our insurance policies came with that policy!

What this has to mean is that instead of pricing the extended warranty on an actuarial basis like a normal insurance policy, it’s instead priced on a psychological basis, because the only way they make money is if you forget to claim the refund.  (Of course, they are also borrowing your $150 for two years interest-free, but with the cost of capital cheap to first-rate borrowers these days, I doubt that’s the biggest way Staples makes money on these warranties.)

This may be a new trend, one that others will have to adopt.  It’s just another way that competition is constantly driving prices down and margin pressure up.

Ralph

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This entry was posted in consumer electronics, customer service, Down economy, Innovation, Pricing, retail. Bookmark the permalink.

1 Response to Free Warranties

  1. Pingback: About that Staples Warranty | Value Acceleration

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