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| *Ostroff, Fair and Company>>>Other - Advertising & Marketing |
Why should a customer purchase a product service plan? |
Why should a customer purchase a product service plan? I refer to those plans as Sucker Bets. If companies were losing money by having to pay out on those plans, they'd stop offering them. The fact that they push them so hard means that there is BIG money to be made on them, FOR the companies. First, almost all products have some kind of initial warranty. If it's going to break, it will most likely break during the warranty period. For extended product protection plans, examine the details. After you've ALREADY paid for the protection, why would you need to pay an ADDITIONAL deductible for actual use if it came up? Many plans only cover certain items, not the entire product, or only under certain circumstances. Also, most will state that if replacement is necessary, they can give you a refurbished product, which means it's already broken before with a previous owner. If it gives you a warm, fuzzy feeling of added protection, feel free to buy a plan. Otherwise, you're mostly wasting your money. They SHOUDN'T! Most products come with warranties. A service plan is basically insurance. It is VERY PROFITABLE which means that the company makes more money selling the policy than they pay out in coverage. If they did not make a profit, then they would not be selling them! Though companies do make a lot of money on these, I think they make sense on some products. Small, portable electronics, like a digital camera or an I-pod can break easily, and since they are a fraction of the cost, they are worthwhile. I bought one on a $500 digital camera, and after a year I had a small speck on the screen, and I returned it and got a new one. the company just want to take you extra money, if you choose a service plan,when you want to repair something, more than twice or three time, they will cancel your services plan by themselves. |
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