Selling a Warranty to Clients

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So, i'm about to redevelop a e-shop .

I've seen it done by a ton of sites but never did it myself.

I'm trying to decide between creating a subscription service warranty or just a 1 time fee.

Options:
Maybe $3.99 per month....
OR
1 time fee, $29.99

The benefits:
If product is faulty, we'll replace it.


From past experiences in offering such a subscription.. People generally don't cancel subscriptions without great reason. A small fee will go unnoticed by most and likely linger for some time to come. The 1 time fee though, is an easier sell.

What is everyone's take / experience with these in modern times? I'm speaking from ancient times.... I did this back around 2009 or so.

Is there much headache that comes with these now? I know it's profitable but is it worth it?
 
Some huge bank, I can't remember which, is going to war against auto-renewals on subscriptions. I can't remember which, or the details, but it was something like "no free trials that convert to subscriptions without customer confirmation" and then something like "customer must re-confirm after 12 months."

The one time sale is probably what I'd do if I was going to do it. It blows my mind how many people buy these protection plans. It makes sense this day and age when we have planned obsolescence and advanced material science and engineering that make things fail right when the warranty is up. You'll probably convert a solid 10% maybe. It'd be a nice bump in profit.

I see a ton of these purchased on my Amazon Associates account, on big items and small (absurdly small). I went to Walmart the other day and the cash register girl asked me if I wanted one on something stupid. I asked her if people say yes and she said "most."
 
You're viewing this the wrong way. It's not which will make you more money but which will be better for your customers. You can even test this, if you have enough volume. Does the monthly re-bill generate more charge backs, complaints, negative reviews? What about the 1 time fee? Did you know that Google EAT takes a company's reputation into account? The negative reviews might mean a penalty in the future. Also, a good customer experience (with sales support) means a higher repeat customer rate as well as word of mouth referral. Customers who are satisfied with the customer support they receive also will overlook a negative experience in the future too.

IMO, you're looking at this at a very basic level and your business won't grow since all you're worried about is the economics. If you don't have any customers, you're not going to have any economics. If your customers are coming to you only because you rank but they don't come to you afterwards, you don't have a business either: you're actually not in control of your business but are only a skilled builder who built a machine that generates income from the search engines.

Business is about people and relationships. In this case, we're talking customers and their relationship with the company and brand. It's also about partners, employees, bosses, investors, bankers, etc. If you can't fathom this, you're not going to do well in business.
 
Philip J. Fry said:
You're viewing this the wrong way. It's not which will make you more money but which will be better for your customers. You can even test this, if you have enough volume. Does the monthly re-bill generate more charge backs, complaints, negative reviews? What about the 1 time fee? Did you know that Google EAT takes a company's reputation into account? The negative reviews might mean a penalty in the future. Also, a good customer experience (with sales support) means a higher repeat customer rate as well as word of mouth referral. Customers who are satisfied with the customer support they receive also will overlook a negative experience in the future too.

IMO, you're looking at this at a very basic level and your business won't grow since all you're worried about is the economics. If you don't have any customers, you're not going to have any economics. If your customers are coming to you only because you rank but they don't come to you afterwards, you don't have a business either: you're actually not in control of your business but are only a skilled builder who built a machine that generates income from the search engines.

Business is about people and relationships. In this case, we're talking customers and their relationship with the company and brand. It's also about partners, employees, bosses, investors, bankers, etc. If you can't fathom this, you're not going to do well in business.
Click to expand...


I want the pro's and con's of the economics. That's the point of this question.

Its a micro-study not a macro.
 
Philip J. Fry said:
It's your business in the end of the day :smile:
Click to expand...

I think you're missing what trying to get across.

I appreciate what you're saying but, I'm interested in knowing the nuisances of the Warranty.

A warranty sales for me will be an immediate profit.

I was also wondering if having people 'decline' a warranty makes it more clear people cannot return a product for post-sale issues if they do not have it.

This can be a profit and also help provide a service some people desire, while others don't. If it's under $100, many times I don't want a warranty. I think of it as, if it lasts a year, i'll rebuy a new one because it's likely upgraded by then.

Ins and Outs!
 
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