11-30-2002, 03:42 AM
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Executive Editor
Join Date: Aug 2006
Posts: 29,160
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The Reason Dell Makes Money
Something quite remarkable just occurred, and it's so simple it boggles the imagination. Last Christmas I bought a Dell 4300S computer for my wife. At the end of this December, the one-year warranty on it expires - we haven't had any problems with it (other than a CD-R issue that seems to have cleared up), so I wasn't consciously aware of the warranty being up in a month. A Dell representative called me to remind me that the warranty was expiring, and offered me an additional year warranty for $99 CND or two years extra for $150. I signed up for an extra year without giving it a second thought - $99 is a small price to pay for a full parts & labour warranty.
In all the years I've been buying consumer electronics, I've never had a manufacturer contact me like this - it's so simple, but can you imagine the revenue it generates for Dell? My respect for Dell's business acumen just went up a notch - they have great instincts for making money in a rough market.
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11-30-2002, 04:06 AM
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Pontificator
Join Date: Jul 2003
Posts: 1,041
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Intuit also calls their Quickbooks customers to extend technical support contracts. It was too expensive to sign-up for the contract considering how often I call them. Yes, Dell is smart.
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11-30-2002, 04:15 AM
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Pontificator
Join Date: Jul 2003
Posts: 1,264
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I usually think extended warantees are a rip. They are just insurance. The price of them is based on the odds of a breakdown, the expected cost of the repair, and a profit for the company. You are much better off self insuring if you can afford to do so. For example, you paid $99 to extend the warantee on a machine that even if totally lost, could probably be replace with a new machine for considerably less than you originally paid. Even if the odds were 5% that it was totally lost, the new machine would have to cost over $2000 to make the expected value of the extended warantee a positive for the consumer. In the long run, you would probably be better off holding on to your $99 and just accept that you may have to buy a new machine if your dies.
By this same logic, I decided the extended warantee on the Axim was too expensive. The features of the $299 model will probably be available (maybe even more features) at the $199 price level by the time the included warantee runs out. I could lay out $59 now, or just run the risk that after a year, if it breaks I would just have to buy a new one and put the $59 towards it.
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11-30-2002, 05:11 AM
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Ponderer
Join Date: Jul 2003
Posts: 106
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Dell might make money, but they must waste it all on me. They sent me a ONE-INCH wide peice of plastic and a screw overnight. Their service is really nice, but overnight for that? Sheesh.
Maybe if they hadn't went to Compal for the Inspiron 5000e it wouldn't be such a creaky, unreliable peice of....... :twisted:
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11-30-2002, 05:17 AM
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Intellectual
Join Date: Dec 2004
Posts: 117
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Sony contacted me three or four times about extending the warranty on my TV. I declined. TVs either go quick or last forever. And if it breaks on me, I can get a new one without feeling guilty.
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11-30-2002, 05:25 AM
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Pontificator
Join Date: Feb 2002
Posts: 1,023
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Selling warrenties was a big thing at Staples. I couldn't hawk a peice of paper the customer will most likely never need with a clear conscious. Asking them, sure. But not selling it like a used car salesman. Everyone there would tell you they'd never buy a plan, but they'll gladly tell the customer it's the Holy Grail. :? Warranties may be good things for companies, and sometimes customers, but pushy sales staff drive me nuts.
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11-30-2002, 05:47 AM
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Pontificator
Join Date: Mar 2004
Posts: 1,479
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Heh
This is another thing about Europe, yah we pay higher prices over here for some stuff(actually most) but in most West European countries law dictates that a manufacturer of electric devices must give a full year of total warrantee on its products(2 years in germany).
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11-30-2002, 06:10 AM
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Theorist
Join Date: Apr 2002
Posts: 284
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Quote:
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I usually think extended warantees are a rip. They are just insurance. The price of them is based on the odds of a breakdown, the expected cost of the repair, and a profit for the company. You are much better off self insuring if you can afford to do so.
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In general, I agree with your sentiments Goldkey. However, I am glad I got an extended warranty from Circuit City when I purchased my HP 568. Less than 1 month after shelling out over $600 for the HP, it fell out of my parka pocket onto a concrete floor and the screen cracked. I called HP to ask if they would replace it under warranty but they were asking for $200 (almost 1/3 of what I paid for the PDA). I was able to take the Jornada back to Circuit City who replaced it with a brand new one at no cost to me. I paid around $100 for the 3 year Circuit City warranty. Needless to say, it was the best $100 I spent considering how much I would be out on a single PDA.
Dell's service is outstanding. Back in '98 almost 1 year after I purchased my old PII, the CD-R died. Dell sent out a rep the next day with a brand new CD-R drive and within 15-30 minutes my system was back to its original state. I was impressed and pleased with the service I received from Dell then and it is one of the reasons why my new computer is a Dell. Dell has earned my respect and $$$ for their great customer service and low cost/high quality systems. :way to go:
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11-30-2002, 10:15 AM
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Neophyte
Join Date: Dec 2004
Posts: 6
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Warranties are sometimes worth it...
My extended warranty really paid off when the LCD, Hard Drive went. The next day service was excellent, and the cost of screen and HD definitely outweighed the cost of the warranty. It's always a gamble.
You can always save on home insurance, but if it burns down, your really glad you have it.
Just my 2 cents worth...
"Microsoft didn't put man on the moon", neither did DELL...
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11-30-2002, 12:12 PM
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Philosopher
Join Date: Apr 2002
Posts: 574
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In europe it's a bit better now. Under the new European Laws, two changes are made:
* Warenty is always two years (not only in Germany  )
* The expected lifetime is considered as well.
The last one is a very nice one. For example if a consumer really invests in a product that promisses a long-living product or has that brand-name, warenty is implicitly extended to more years. So if your dishwasher breaks down after 5 years, and the producer said it would be at least 10 years, you get half your money back on the repairs !
Jaap
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