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Calculating warranty ROI

Get answers to all your questions about Calculating warranty ROI

Smart ways to figure out if warranty coverage will save you money in the long run

How can I figure out if warranty coverage will save me money?

Compare warranty cost against expected repair expenses. Research common problems for your product and their repair costs, then multiply by the chance of failure. Factor in the warranty's claim approval rate and your deductible. For example: if a $2,000 warranty could cover $8,000 in potential repairs with 15% failure probability, your expected cost without coverage is $1,200. Add the peace of mind value. Quality warranties from established providers often provide better value due to higher claim approval rates.

How do repair costs compare to warranty costs?

Electronics repairs typically run $200-800, while warranties cost $100-400. Major repairs often exceed warranty costs, which is why coverage makes sense. Laptop screen repairs average $300-600, smartphone repairs $150-400, and TV repairs $200-500. The key is protection against those big-ticket failures that would hurt your wallet. SureBright's pricing reflects realistic repair cost analysis.

When does warranty coverage break even financially?

Break-even varies by product but generally happens when repair probability times average repair cost equals warranty price. For automotive, break-even typically occurs around 8-15% repair probability. Electronics break-even happens around 10-20% failure rates. For merchants, consider customer satisfaction benefits that often exceed pure financial calculations. Quality warranty programs increase customer loyalty and reduce complaint handling costs.

What should I watch out for when buying warranty coverage?

Common issues include coverage exclusions for wear-and-tear items, deductibles that weren't clearly explained, restrictions on where you can get repairs, and potential claim delays. Some warranties require pre-approval for repairs, which can be inconvenient. Lower-quality providers may have poor customer service or financial problems. Reputable providers like SureBright offer transparent terms and strong financial backing to minimize these issues. Always read coverage details and research the provider's reputation.

Should I pay upfront or monthly for warranty coverage?

Upfront payment often saves 5-15% compared to monthly financing but requires immediate cash outlay. Monthly payments preserve cash flow and investment opportunities but typically include financing charges. Consider what else you could do with that cash versus financing costs. Monthly options provide flexibility but cost more overall. For business purchases, tax implications might matter too.

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