Extended Warranty

magnum

I recently gave an estimate for an addition to a customer who said it was between me and another contractor. The other contractor was offering a lifetime warranty on all parts and labor. I was floored that someone would offer this. They wanted to know if I would offer the same and of course I said no. I was not going to offer a warranty for material that the manufacture would only warranty for 1 yr. But it did get me thinking about offering more then a 1 yr. warranty. When you buy tools, appliances, auto's they offer extended warranties for a fee. So I was thinking about offering extended warranties for a % of the final cost. Anyone fool with this idea?

ch0mpie

In NYC you can be hit with a fine by the dep. of consumer affairs for offering lifetime warrants. It is considered a false claim.

Mike Finley

The first thing I would have asked the customer for was a copy of the WRITTEN life time warranty this other contractor was offering. That probably would have ended the thing right there, since if it wasn't in writing it doesn't mean squat. Or if the other contractor actually did have it in writing, I'm sure what lifetime says and really means would have been obvious if it was actually written down.

Even in the best of worlds with an honest to goodness no BS warranty "lifetime" can mean not nearly what it sounds like. "Lifetime warranty on shingles" can mean the "lifetime" of the shingles. 10 year shingle = 10 year warranty. And then of course there are 36 what ifs and stipulations you have to follow to keep it in force.

If I found out the "lifetime" warranty wasn't for real from the other contractor I would certainly have turned that around on him and used it to reinforce my image in the customers eyes as somebody who would deal with them in plain talk and not smoke and mirrors like the other guy.

skip555

Ive offered warrantys that exceeded the manufaturers for quite a few years to stay competive It really has worked out as Ive only had to go in pocket a couple of times to replace a item

but then Im talking 5 year warranty where the manufactrer does tow or a three year warranty where they do 1

lifetime no way ...

NHCharger

I wonder how long that contractor has been in business. I agree with Mike, ask the homeowner if that's in writing and how many referances that contractor gave. I wonder if he gives all his customers that deal.

Mike Finley

You're going to have to weigh the pros and cons of the percentage of your business you want to devote to becoming a warranty servicing company instead of a construction company. You might be better off searching for a 3rd party that would sell you a warranty that you can resell to your customer. If that exists then you aren't going to be spending x% of your companies time as a warranty company, you just pass on the whole thing to the company that sold you the policy and that company would pay you to fix your own issues.

red_cedar

I have offered extended warranties ( labor ) in the past and may again. I figure 500-1000 per yr. for additional coverage. Do it right the first time and your good to go.
The warranty buisness is a numbers game.

skylands

Wow!

Mike gets the award for the third party warrentee idea.

Used cars dealers do it so it just may be something we can do.

Thanks Mike!

Warrentees are something to be cautious of in the first place. We had seven houses sided with Alcoa Colonal Blue in the same year. Those houses turned gray within a year. (mostly on the sunny side). Alcoa only offered to replace the siding but no labor, nails, or J, and only on the effected sides of the homes.

Zatol

I suspect that the customer was trying to push you a little to get more from you... Chances are they had no such offer from another contractor..

I had a guy approach me with a house plan and said that another contractor had quoted him a price of 98/sf, lot included... I told him then that I would be a waste of time because I could never build the house that he wanted for that kind of money... He came back to me several times later asking me for a quote and I refused. It chaps my rump when customers lie to me to try and get a lowball price. If I suspect they are doing that, then I will have nothing to do with them... I will also give only one estimate. I have had several come back to me after a quote and tell me that a competitor was lower and ask me to quote again. I don't participate in that crap...

Mike Finley

Sh#t I would have loved to have had that customer do that to me. Talk about the profits they would have paid me!!!!! Customer tried you on and f'd up, after that you were in the driverseat. Control = lots of money.

hOMEFIXMIKE

Here in Michigan, Mr. Roof has a written Lifetime, non-prorated warranty. I have read it, not too many loopholes either. The use a rubberized shingle manufactured with thier name on it, and use a synthetic underlayment, as well as 6' of ice shield. they will only give the warranty if the roof is or can be veted to current code, and requir a every fifth year inspection of the roof, for a $10 fee. the warranty is also tranferrable.
Ive read, it, my lawer read it, and it holds up, and they have been around for over 45 years in Ann Arbor, Michigan.
and the finish most roofs in about 6 - 8 hours.

D.C.

We have a basic california minimum written warranty and an unwritten lifetime warranty. Basically, if one of our clients calls us out we go and fix it no matter how old. We have a service department. If it's billable, we try and bill it. If we get in a dispute, we cave-in and eat it. We justify this expense as our entire advertising budget. We know we can never do battle in a court of law with our clients. They have an army of attorneys, and limitless funds. To date, we have never been sued.

Grumpy

First off what trade are you speaking about?

Many of the manufacturers I work with allow me to sell extended warranties. It's a nice avenue for upselling.

I've thought about ofering my own extended labor warranty, and decided against it. Why? Well the customer may always say something to the effect of "what will you do differently if I buy the warranty? If everything is going to be the same, then in theory it should last longer than the initial warranty. Instead I would prefer this: The last year before the warranty expires I sell them an inspection and make any necessary repairs for free, since the roof/siding/gutters are still under warranty. THEN after I fix their whatever for efree, if need be, I sell them on a maintenance contract.

Maintenance contracts are big in commercial and multi family type situations, but not so common in single family situations, but not impossible.

Brian

A warranty is only as good as the party offering it. An X year warranty is meaningless if the business no longer exists.

The quality of the business will determine the quality of the warranty. Words are cheap.

Brian Phillips

__________________
Houston Interior Painting
Houston Exterior Painting
Houston Painting Contractor