Extended warranty

Pumpguy

Do any of the contractors here offer their customers an extended warranty on a boiler or similar equipment install, a warranty that is longer than that of the equipment supplier or manufacturer?

If yes, how do you price this extended warranty, and what are your terms and conditions?

STEVEusaPA

I wouldn’t buy one, so I would never offer one to my customers.

Pumpguy

@STEVEusaPA , I agree with you completely, and neither would/have I. Unfortunately, my customer is insisting on my offering an extended warranty.

Never having been in this position before, I'm trying to get a feel for how others have handled this.

nicholas bonham-carter

My experience with an extended warranty on a modern washing machine is both good, and bad:
The cost of replacement parts, (mostly electronic boards), is high, and covered by the warranty, so that is good.
The procedure of having the warranty company approve every step along the way is bad. That means a repair will take longer-in my case 6 weeks, for 3 visits, replacing 2 boards. Luckily it had worked during that time-just not so well.
Why not sell the customer a spare boiler, which can be cannabalized later on? Most warranties have the provision for a deductible cost for each repair during the lifetime of the warranty, and that could be the cost of swapping the parts.—NBC

Pumpguy

This is for a new duplex vacuum pump to replace the original 1920s vintage pump which is original to the house; my only residential customer.

This equipment is extremely reliable, so a claim isn't very likely. That said, Murphy is always lurking in the shadows and since the customer is insisting, and I have to take the risk, I might as well get paid for it.

Just curious what others think?

mark schofield

my oil company, which also does installs, offers a comfort plan. It includes a yearly cleaning/maintenance and tuneup. And coverage for all the parts - pumps, electronics, zone valves, expansion tanks, ect.

Pumpguy

Thanks @mark schofield. Can you give me some idea of the basis for the pricing for this plan? Not asking for exact dollar amount, just some idea of how the price is arrived at?

Rich_49

Extended warranties are strictly for manufacturers to offer . They built it , they should be the only one to gamble it'll last for a few extra years .

STEVEusaPA

I would only extend what the original manufacturer was offering, which is probably not complete new replacement and labor.

Some people have to have them, and I have a couple of customers (maybe 5?) who do. I explain the pros and cons, tell them the cost, let them decide. I can’t even recall the last time I had to honor one. I guess if I were a 'good' business person I’d offer them to all my customers as it’s a real money maker.
For example I have about 350 residential oil customers. Last sept 1 to today I had 19 service calls. Some were bleeding radiators, some thermostats. The rest were an equal mix of primary controls, ignitors, a circ or two, 2 zone valves and an expansion tank.
More components get replaced during annual tuneups.

If that’s what they insist they want, maybe extend 5 years longer & 15% of total cost of job per year, if you’re totally comfortable with the probability it will last that long.

Keith M

Slant/Fin residential high efficiency boilers come with a 5 year parts and labor warranty. Slant/Fin residential cast iron boilers can also get a 5 year parts and labor warranty thru Slant/Fin HydroMaster contractors. The HydroMaster program is available ONLY thru HydroMaster contractors.
Slant/Fin administers BOTH programs thru our technical services department. So, you will not be passed off to a third party. I repeat, both 5 year extended programs are administered thru Slant/Fin's technical services department and not a "warranty company".
Both programs are a little different. Either call us directly or speak with your local Slant/Fin rep for more details.
Keith Muhlmeister
Slant/Fin Corporation
516 484 2600 ext. 367

mark schofield

https://jjsullivaninc.com/wp-content/uploads/2013/04/Service-Agmt-Update.pdf

STEVEusaPA

This is a pretty standard nonsense agreement. Your annual plan doesn’t include a cleaning, or even a cleaning 'if needed'. And I doubt they are doing some of the other stuff.
Also #7 is mis-worded as I doubt they are replacing a fuel pump every year.
One thing that is always ambiguous in these standard agreements is that it states you are covered for one year, parts and service.
If next year when you renew and before the past year is up they find your transformer is weak and needs replacement, do they cover it because the year is not up? So imagine how profitable these plans are for the company.
Also 'during the heating season' is interesting. Look at the many components being used by the AC on a furnace. If any of them fail, they won’t cover. So no hot water if it’s not in the heating season is not a 24-7 service call. If your hot water isn’t working at 5pm on Friday, no hot showers until Monday after 7:30 am?
Like I said, very profitable for the company.

Pumpguy

Thanks for the above comments.

My post was not about the pros and cons of extended warranties, or or service contracts, or how and by whom they might be administered and actually carried out.

My post was a request for a pricing basis. I.E. for a given total job value, and a set period of time, what pricing basis for an extended warranty would be fair to both me and the customer?

I have some ideas, but since I've never been there before, I'm curious what others think, or have actually done?

Thanks for all input.

Larry Weingarten

Hi @Pumpguy, How about calling your insurance company and ask if they could come up with a price to insure against failure. That could be the number you’re looking for.
Yours, Larry

Pumpguy

@Larry Weingarten, Hmm...., interesting Idea. I never thought of that. I'll give them a call, and see what they say.

Thanks for this idea.