Are Those Extended Warranty's Really Worth It?

What about these plans?

Why are extended warranty plans so important to companies?  Why do they put so much pressure on the consumer to buy these?  What sales ploys excite the consumer to buy?  Well to answer the first question... it is profit!  You're probably saying, 'dah.'  But what you may not realize is how much and what kind of profit is it?

Remember, I believe profit is a good thing!  It keeps businesses in business and motivated to continue supplying us with the products consumers need and enjoy.  Our economy is based on buying and selling and making a profit continues that trend.  So it is my position that profit is not the bad guy, it's how they get these profits that gets my attention.

It is my intention to give you the inside information so you can make a wise buying decision and not end up feeling or looking like a chump!

The reason why these 'plans' are so important to profit-making companies is because of the amount of profit involved.  A normal retailer needs to make an average gross profit (the profit before expenses are subtracted) of around 33%.  The profit built in to these plans hovers around 65%!  When you spend $20, $100, or over $200 on these gems, more than half the amount is pure profit.  Without this profit the retail price of technology would have to be much higher. These plans help keep the prices of technology low.

 Remember, in an earlier post, I told you the gross profit of laptops, printers, TV's is about 9% or less, sometimes below cost!  These are the competitive products that consumers shop for and help's one decide where to shop.  To justify this 'give-away,' retailers must make this crucial profit up in add-ons and plans.  They have to apply the sales pressure to buy these plans or go out of business.

Here's what you need to know before you consider buying these plans.  You will pay an average of 30% of the purchase price to protect your product for two or three years.  Is this 'peace of mind' worth that to you?  If it is, then buy away.  If it does not sound like a wise investment (as some salespeople put it,) then take the slim chance of your product failing and keep your money where it belongs, in your pocket.  Instead of logic, some consumers buy into the emotional fear factor and sheepishly succumb to the pressure of the desperate salesperson.

The consumer that does not think these numbers through before the close later winds up feeling like a chump!

Tomorrow, more on extended warranty plans, an important part of retail you don't want to miss

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The definition of a chump:

a gullible person, a sucker; someone easily taken advantage of, the target of a scam.

Learn from a former salesperson and trainer how salespeople drive sales. Learn how to keep more money in your pocket where it belongs! There are two ends of every sales stick!  One end cries 'chump.'  The other end boasts 'champ.'  I know which end of the stick I want to be.  How about you?