Extended device warranties, are they worth it? This question inevitably arises when purchasing new devices for your business. While most business range products come with extended device warranty included, some businesses may opt to purchase consumer grade or lower spec devices which only come with base 1 year warranty. In these cases, should you add extended warrant?
We’ll explore what extended warranties actually cover, analyse whether they’re worth the cost, and identify situations where they might make sense.
What Is an Extended Warranty and How Does It Work?
As defined my ASIC, an extended warranty is an arrangement under which a customer pays a fee in return for another person (the warranty provider) agreeing to repair or replace (or cover the cost of repairing or replacing) parts or components of goods in the event of defects in, or failure of, those parts or components. Providers of extended warranties generally describe these products as offering additional coverage to existing warranties (such as ‘warranties against defects’ given by manufacturers with new goods) or consumer guarantees contained in the Australian Consumer Law.
In short, extended warranties are additional coverage you can purchase beyond what comes standard with your new device. They’re optional contracts that promise repairs or replacements if your device breaks down after the manufacturer’s base warranty expires. They also provide additional protection for defects or failures not covered under the original manufacturer’s warranty, such as theft or damage.
When purchasing devices, these warranty addons typically can vary greatly in price. They may be cheap in comparison to the product’s retail price, but can also be expensive in comparison. The coverage period varies but generally begins after the manufacturer’s warranty ends. This means what’s advertised as a three-year extended warranty often functions as just two years of additional coverage.
Are Extended Warranties Worth the Cost?
For businesses, device turn over is often 3 to 5 years. With this in mind, purchasing a device with included extended warranty of purchasing a warranty addon give your business the peace of mind that your device is covered for the duration of its lifetime withing your IT environment. Since most business devices come with extended warranty included, it feels like a no brainer. In the case of purchasing consumer devices for business use, extended warranty would likely be beneficial as it is being used in an environment that is was not necessarily built for. An example could be using a consumer range PC for daily business use.
When an Extended Warranty Might Make Sense
Specific scenarios exist where the added protection makes financial sense, and extended warranties are the way to go.
High-risk usage scenarios
Extended warranties become significantly more valuable in businesses with high traffic, or devices experiencing high usage. Likewise, business-critical equipment deserves extra protection if your work depends on a single device. The potential income lost during repair time often outweighs the warranty cost.
Expensive or fragile electronics
Some electronics simply break more often than others. Desktop PCs have a 37% repair rate within the first three years, followed by laptops at 33%. For these higher-risk items, an extended warranty priced at less than 20% of the product cost might be reasonable. Additionally, smartphones with their vulnerability to drops and water damage often benefit from coverage.
