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.


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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