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Who buys extended warranties? Poor people. June 16, 2009

Posted by jeremyliew in Uncategorized.
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NY Times has a really interesting article about who buys extended warranties:

The study reported that consumers are far likelier to buy warranties for products they consider enjoyable (like iPods) than for dull products (like landline phones), simply because, dollar for dollar, they value the fun products more. Therefore, they would be more upset at the prospect of losing them.

The study also found that people with lower incomes are more likely to buy such warranties, because they know they cannot afford to replace the products.

It also notes that many consumer advocacy groups consider extended warranties to be a bad deal. Interesting research.

Comments»

1. Daniel Haran - June 17, 2009

For most consumer electronics, If there’s a problem in the 1st 30 days, you’re already covered. So an extended warranty only covers you for the time you’re the least likely to have a problem.

I’ve seen extended warranties for computers that cost as much as 1/4 of the total machine. Margins and sales commissions are sky high, and sales people prey on consumer’s fears.


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