Extended Warranty - Website?

How do they work?

[olimits7]

Hello,

I was wondering does anybody uses extended warranties for their ecommerce business? If you do how do they work?

I'm debating if I should start offering extended warranties on my website, but if I do I don't know exactly how to calculate the right amount to charge for this.

Any help will be appreciated.

Thank you,

olimits7

[gabidi]

When i first started doing it it was just an educated guess, i checked how many complaints i got from customers in regards to products received for the previous year, i then assumed 60% of those who complain would have to return the product for servicing/warranty. Factoring in the average product repair cost... bara bing bara boom...got a rough figure for pricing.

So far it's been profitable but it's too early to call.

Hope that helps.

[inbound]

You should be careful, using the wrong terminolgy for such a service can land you in deep trouble. You do not want to infer that you are selling insurance if it's just an extended service agreement.

It's a while since I was involved in that area, but I think it's worth investigating what pitfalls are there.