Extended Warranty

I had lunch in the mall today

I passed by a local video game retailer who shall remain nameless. As I browsed I overheard the shopkeeper selling extended warranties on VIDEO GAMES.

I'll say that again.

They were pitching extended warranties on video games.

Extended warranty is the retailer's cash cow. Most products either break immediately or last well past the extended warranty expiry date, meaning that the actual cost for the retailers to service something under extended is a helluva lot less than what they are charging.

Back in the day when I worked at another well-known electronics retailer who shall remain nameless, we were told to push extended warranty until it was past the magic number of 17% of sales, because extended warranty profit margin was 45%.

Let me say that again. Extended warranty had a 45% profit margin.

Sales guys/gals didn't get promoted unless their extended warranty sales topped 20%.

And today this frazzled mom shelled out $10 to cover the 3 games she bought. It must be nice to have the money to waste...