At Your Service
Overall, Glikes says that warranties on plasma and rear-projection televisions are easiest to sell. "It results in additional bottom line profit," he explains. For plasmas, for instance, he says, "I think the repair bills on single repairs are close to the cost of extended warranties," thus encouraging customers to insure for future repairs on what amounts to one of the newest, most expensive home theater technologies to date. "The comfort level on extended warranties is based on expense," he says. "The more complicated the technology, the more dealers sell warranties."
"The other growing category," says Glikes, is home-theater packages. If a dealer sells $25,000 packages, we're married to that customer. It makes sense to have a continued revenue stream. We're going to service that customer, so rather than pay as you go, let's pay up front."
The obstacle to this, however, comes down to commodity products such as VCRs and DVD players. "The first hi-fi VCR I bought was $495," Glikes remembers. He bought a service plan at the time for $45, which he says "was a good deal."