If you own a business that produces items meant for long-term use -- small appliances, electronic gadgets, and so on -- you likely offer a warranty to your customers for a specific amount of time. It is a very good idea to offer those same customers the option of buying an extended warranty. Extended warranties sometimes get a bad rap as not being worth the cost, the logic being that by the time the extended warranty goes into effect, it would cost less to buy a new version of the item instead of fixing it. But that's not always the case, and extended warranties offer three advantages for you and your business.
Appeals to Customers Who Don't Like Planned Obsolescence
One of the main drivers of the consumer economy is planned obsolescence, the idea that items are manufactured specifically to fail so that consumers will have to buy new products and spend more money. Not everyone likes this idea, and they would rather fix items and hang onto them for as long as possible. Offering an extended warranty gives these customers the chance to avoid having to find a new version of the item. They know that if they spend the money, they'll be able to keep using what they have for as long as they can.
Shows You Have Faith in Your Products
Extended warranties also show that you have faith that your products won't need repair. If you knew that your products were going to break, the last thing you'd offer would be an inexpensive repair program -- you'd offer nothing so that you didn't have to spend a lot of time on repairs. But offering the extended warranty shows the customer that you think your products will last well past the end of the basic warranty.
If a customer has a product of yours, that product breaks, and the customer can't fix it without spending a lot of money, he or she may end up buying another version of the product made by someone else. Not offering the customer the chance to have the item fixed for no-to-low cost gives the customer an escape route to go over to another company's side. But if you offer an inexpensive extended warranty that allows the item to be fixed for free (on the customer's end), then the customer has a very good reason for staying with your company, and the extended warranty may convince the customer to buy another of your products when that first one is finally beyond repair.
If you have more questions about how to set up and administer an extended warranty program, contact a company that helps create these programs. You'll find out what services are standard for extended warranties and what sort of variations you can offer for the short- and long-term.