Talk:Service plan

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Unsubstantiated claim...[edit]

Okay, this statement is completely unsubstantiated. "Most electronics (other than personal computers) never fail within the service plan period, and many of the customers that have a product fail forget that it's covered." Even the truth to this statement depends purely on the specific product or type of product. I worked in the camera department at a Best Buy for several years and while it was not the greatest job in the world, I did discover a lot of things from working there.

While we'd typically sell an average of about 10-15 cameras per day, we saw at least 1 camera daily come into our department that had become non-functional within the first 2 years. In addition, we daily had shoppers who were looking for a new camera because their old one stopped working or a new camcorder because they could no longer play back their tapes. It was almost always the same things with cameras, 1) something happened to the connection between the sensor and the LCD producing a blank screen and rendering the camera useless 2) the lense got stuck in or out, usually after having the camera in a humid or dusty environment (both of which are covered under Best Buy's Performance Service Plan). 3) the camera instantly shut off after powering on. 4) The camera would simply not power on.

Customers who did not have the service plan would often say they called the manufacturer who wanted to charge them $150-250 to repair it. Often times they learned this after shipping their product to the manufacturer along with a $40-80 check for "assessment". In most cases they ended up spending twice the price on a new camera/camcorder. Needless to say, the cost of the service plan Best Buy sold was nearly 1/3 the cost of the repair and 1/5-1/8 the cost of the new camera, not to mention that it is pro-rated so if something happened to the camera that was not covered (abuse/physical damage) the customer could recieve the remainder of their money down to the month (if they spent $60 and had it for 12 months they would get $45 in return). Several times a week we saw customers walk away with new cameras for noting more than the cost they spent on their service plan.

So from experience at a high volume store, I know the statement "Most electronics never fail within the service plan period" is completely subjective and incorrect. You have no authority to state "most electronics never fail within the service plan period" from personal experience unless you've worked on a sales floor or in a service department where you've dealt with a great number of electronics. And unless you know a LOT of people (enough to take a legitimate survey) or can site a legitimate source, you can not simply state "many of the customers that have a product fail forget that it's covered". If they failed to forget, then you would not know it. Therefore I am removing this statement as it adds to objective value to this entry.

The target here should not be the companies who offer service plans, but the poor coverage and cheap production of consumer electronics by big companies which necessititates the sale of "service plans" by retailers to improve customer satisfaction (and still opperate at a profit) where the brand can not.


The article needs repair, I'll freely admit it. I'd even say it may need a rewrite. It needs more substance, more linked support, that sort of thing. I've kind of abandoned it so you won't see it from me. Consumer Reports has some great articles on this sort of thing, as do a number of other consumer advocacy and insurance groups.

As for working on the sales floor and knowing the failure rate, yes, I do, thanks. Not that I'd have to work there for long, it's simple logic: MOST stuff isn't repaired, it's replaced, so do the math, if a replacement plan for something is 10-20% of the cost (typical) and it broke 50% ("most") of the time, it would have to be at least 60% margin for them to break even.

If you want real numbers here they are: service plans are about 50% margin, most things in the store are 10-20% markup, replacement plans are 15-30% of the cost for two years, so mathematically, that means a 7-12% swap rate within 2 years. That's assuming the cost of the item stays the same, when in reality it drops, so it's actually lower.


Riotgear 23:53, 12 January 2006 (UTC)