Neither Circuit City nor Best Buy discloses how much of its bottom line comes from extended warranty sales. But analysts have estimated that at least 50 percent and in some lean years 100 percent of profits at the electronics retailers come from extended warranty sales.
My guess is that the rest comes from mail-in rebates.
Thanks to Tyler Cowen for the pointer.
Oct 5 2006
Tyler Cowen reminds us that the U.S. is the leader. In real terms, spending on American biomedical research has doubled since 1994. By 2003, spending was up to $94.3 billion (there is no comparable number for Europe), with 57 percent of that coming from private industry. The National Institutes of Health’s current a...
Oct 4 2006
A lot of social scientists are now interested in the effects of the BMI, or Body Mass Index. In the metric system, your BMI is equal to your weight in kg divided by your height in meters squared. If you prefer English units, switch to pounds and inches and multiply by 703. If you've got a secure body image, put your...
Oct 4 2006
The Washington Post says, Neither Circuit City nor Best Buy discloses how much of its bottom line comes from extended warranty sales. But analysts have estimated that at least 50 percent and in some lean years 100 percent of profits at the electronics retailers come from extended warranty sales. My guess is that the ...
READER COMMENTS
Duane Gran
Oct 4 2006 at 10:47am
I see this as a form of subsidy. Enough people gamble on the odds that they will need to exercise the warranty and it keeps the prices low for others who gamble on the odds of the product lasting. Both sides get what they want.
Phil
Oct 5 2006 at 2:59pm
I think that’s great. It means that I get all my stuff below cost, given that I never buy the extended warranty or neglect to mail my rebate form.
Thanks, nervous and lazy buyers!
Abby
Oct 11 2006 at 4:42pm
How often do you actually have to rely on a warranty for a product? I can understand getting a warranty and even extended warranty on “high dollar items,” such as cars and even some home appliances. When it comes to getting a warranty on smaller items such as cell phones, I think it is a waste of money. Salespeople do a great job of convincing consumers that they need these warranties. For those of us who are less concerned with the possible risk involved with not buying the warranty, we can enjoy paying lower prices.
Comments are closed.