Honest opinions about how to buy Appliances and Lighting.

Friday, July 13, 2007

Consumer Reports(again)

As I said previously, Consumer Reports is a good guide. In this months edition, they discuss extended warranties. Two years ago, we did not sell extended warranties. At that time manufactuers had a five year limited warranty on parts, so a five year warranty was not a good value for the consumer.

Then Whirlpool bought Maytag, and dropped all the limited warranties. Frigidaire and GE followed, so now the average warranty is 1 year full. Now it is a legitimate consideration for products over $550.

The math is easy. The average completed service call is $129 plus $75 to 150 in parts versus a $99 five year warranty. For high brands, it is more expensive. Also, with gas and health insurance rising, these numbers are expected to increase substantially. The average service rate within the first year is 16-18%. We completed 15,000 service calls within the warranty period in 2006

A couple of pointers:

Do not buy a warranty from a company that cannot fix the problem. If we are to believe blogs, the Better Business Bureau and internet surveys, consumers are mad when discovering a product cannot be fixed due to an apparent lack of support. Be very wary of 1-800 numbers that are not company owned.

Do not overspend. (stop snickering), it is amazing to me when I see people spending $350 for a service plan on a basic product. The maximum should $150 for a regular product and $300 for an expensive professional

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