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A service plan is a contract [1] to purchasers of products for an additional fee. While service plans resemble extended warranties, there are several important differences between the two, often cited by retailers that sell them.
A service plan is a separate policy from the manufacturer's warranty. While the typical service plan does require preventative and routine maintenance to be taken in accordance with the manufacturer's warranty, it does not actually require a product to fail or malfunction under the same conditions. Service plans are also active from the date of purchase, unlike extended warranties, which become active when the manufacturer's warranty expires, meaning products can be purchased with service plans that is before or at the same time as the manufacturer's warranty.
The key distinction is that a warranty strictly covers defects in workmanship and materials, while service plans cover product failure in general with a list of exclusions. While the exclusion list includes most situations that would disqualify a product from warranty coverage, there are things that fall outside the product's condition that aren't excluded, such as power surges. However, this is offset by the infrequency of covered conditions, and misinterpretation. For example, a lightning strike is considered an environmental cause, and consequently is excluded from most service plans, even if they claim power surge protection.
To help differentiate from manufacturer's warranties, service plans occasionally come with additional benefits, such coverage for theft or accidental damage, replacements if a product fails a given number of times ("no lemon policy"), access to additional services, priority service and technical support.
Service plans vary in how an item is serviced. Some items may be serviced by the retailer's technicians, some may be sent out for repair, some may ship a replacement to the customer, some may be replaced by the retailer with a new item from the store inventory, or exchanged for store credit.
Generally, if an item can be serviced in-store by the retailer, it will be. Some items like home theater equipment are repaired on-site with the retailer covering the cost. If the product can't be serviced by local technicians, then the items are sent to the manufacturer to be serviced. If the item is not serviceable or service is too expensive, the retailer will simply replace the product, or issue store credit for a newer model.
Whether an extended service plan is worth the extra cost depends on the item and the perceived value by the consumer. Basic service plans on desktop computers, for example, typically come close to the actual average repair cost of a system, with the retailer using the service plan as a way to keep the customer from going to a competing service center. Support options can be beneficial to consumers who are unfamiliar with the use and maintenance of a computer.
Replacement options may present an advantage over an RMA if the customer is disrupted enough by a product's absence (such as computer upgrades), but the low failure rate of the products and the ability to buy temporary substitutes usually offsets the price. Some items such as low-end headphones may consistently fail before the end of the coverage period, which can be advantageous.
Service plans are seen mainly in office stores and electronics retailers, largely because of perceived fragility of electronics hardware and insecurity over the use of refurbished product. Some items such as computers and sale items produce very little profit for retailers, so selling service plans and accessories is essential to profiting from the transaction (see Loss leader). In these cases, service plans are usually bundled with additional high-margin services, such as phone support, at reduced prices to add to the perceived value of purchasing them.
Some retailers that offer service plans include Sears (Master/Repair Protection Agreement/Merchandise Replacement Agreement), OfficeMax (MaxAssurance Warranty Plan), Best Buy (Geek Squad Protection), CompUSA (Technology Assurance Program), hhgregg, Office Depot (Performance Protection Plan), Radio Shack(Replacement Plan/ Repair Plan), Staples (Technical Support and Protection Plan/ Product Replacement Plan), Ritz Camera Centers (Extended Service Plan), Target (Extended Service Plan), and Brand Source (Expert Protection).
A grey market or dark market is the trade of a commodity through distribution channels that are not authorized by the original manufacturer or trade mark proprietor. Grey market products are products traded outside the authorized manufacturer's channel.
In economics and industrial design, planned obsolescence is a policy of planning or designing a product with an artificially limited useful life or a purposely frail design, so that it becomes obsolete after a certain pre-determined period of time upon which it decrementally functions or suddenly ceases to function, or might be perceived as unfashionable. The rationale behind this strategy is to generate long-term sales volume by reducing the time between repeat purchases. It is the deliberate shortening of a lifespan of a product to force people to purchase functional replacements.
A product's service life is its period of use in service. Several related terms describe more precisely a product's life, from the point of manufacture, storage, and distribution, and eventual use. Service life has been defined as "a product's total life in use from the point of sale to the point of discard" and distinguished from replacement life, "the period after which the initial purchaser returns to the shop for a replacement". Determining a product's expected service life as part of business policy involves using tools and calculations from maintainability and reliability analysis. Service life represents a commitment made by the item's manufacturer and is usually specified as a median. It is the time that any manufactured item can be expected to be "serviceable" or supported by its manufacturer.
In the United States, a car dealership is a business that sells cars. A car dealership can either be a franchised dealership selling new and used cars, or a used car dealership, selling only used cars. In most cases, dealerships provide car maintenance and repair services as well as trade-in, leasing, and financing options for customers.
An extended warranty, sometimes called a service agreement, a service contract, or a maintenance agreement, is a prolonged warranty offered to consumers in addition to the standard warranty on new items. The extended warranty may be offered by the warranty administrator, the retailer or the manufacturer. Extended warranties cost extra and for a percentage of the item's retail price. Occasionally, some extended warranties that are purchased for multiple years state in writing that during the first year, the consumer must still deal with the manufacturer in the occurrence of malfunction. Thus, what is often promoted as a five-year extended guarantee, for example, is actually only a four-year guarantee.
In contract law, a warranty is a contractual assurance given by a seller to a buyer, for example confirming that the seller is the owner of the property being sold. A warranty is a term of a contract, but not usually a condition of the contract or an innominate term, meaning that it is a term "not going to the root of the contract", and therefore only entitles the innocent party to damages if it is breached, i.e. if the warranty is not true or the defaulting party does not perform the contract in accordance with the terms of the warranty. A warranty is not a guarantee: it is a mere promise. It may be enforced if it is breached by an award for the legal remedy of damages.
Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet using a web browser or a mobile app. Consumers find a product of interest by visiting the website of the retailer directly or by searching among alternative vendors using a shopping search engine, which displays the same product's availability and pricing at different e-retailers. As of 2020, customers can shop online using a range of different computers and devices, including desktop computers, laptops, tablet computers and smartphones.
A distribution center for a set of products is a warehouse or other specialized building, often with refrigeration or air conditioning, which is stocked with products (goods) to be redistributed to retailers, to wholesalers, or directly to consumers. A distribution center is a principal part, the order processing element, of the entire order fulfillment process. Distribution centers are usually thought of as being demand driven. A distribution center can also be called a warehouse, a DC, a fulfillment center, a cross-dock facility, a bulk break center, and a package handling center. The name by which the distribution center is known is commonly based on the purpose of the operation. For example, a "retail distribution center" normally distributes goods to retail stores, an "order fulfillment center" commonly distributes goods directly to consumers, and a cross-dock facility stores little or no product but distributes goods to other destinations.
A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike an intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good, but the parts purchased to manufacture them are intermediate goods.
Wear and tear is damage that naturally and inevitably occurs as a result of normal wear or aging. It is used in a legal context for such areas as warranty contracts from manufacturers, which usually stipulate that damage from wear and tear will not be covered.
Lemon laws are laws that provide a remedy for purchasers of cars and other consumer goods in order to compensate for products that repeatedly fail to meet standards of quality and performance. Although many types of products can be defective, the term "lemon" is mostly used to describe defective motor vehicles, such as cars, trucks, and motorcycles.
In marketing, a rebate is a form of buying discount and is an amount paid by way of reduction, return, or refund that is paid retrospectively. It is a type of sales promotion that marketers use primarily as incentives or supplements to product sales. Rebates are also used as a means of enticing price-sensitive consumers into purchasing a product. The mail-in rebate (MIR) is the most common. A MIR entitles the buyer to mail in a coupon, receipt, and barcode in order to receive a check for a particular amount, depending on the particular product, time, and often place of purchase. Rebates are offered by either the retailer or the product manufacturer. Large stores often work in conjunction with manufacturers, usually requiring two or sometimes three separate rebates for each item, and sometimes are valid only at a single store. Rebate forms and special receipts are sometimes printed by the cash register at time of purchase on a separate receipt or available online for download. In some cases, the rebate may be available immediately, in which case it is referred to as an instant rebate. Some rebate programs offer several payout options to consumers, including a paper check, a prepaid card that can be spent immediately without a trip to the bank, or even as a PayPal payout.
An auto mechanic is a mechanic who services and repairs automobiles, sometimes specializing in one or more automobile brands or sometimes working with any brand. In fixing cars, their main role is to diagnose and repair the problem accurately and quickly. Seasoned auto repair shops start with a (Digital) Inspection to determine the vehicle conditions, independent of the customers concern. Based on the concern, the inspection results and preventative maintenance needs, the mechanic/technician returns the findings to the service advisor who then gets approval for any or all of the proposed work. The approved work will be assigned to the mechanic on a work order. Their work may involve the repair of a specific part or the replacement of one or more parts as assemblies. Basic vehicle maintenance is a fundamental part of a mechanic's work in modern industrialized countries, while in others they are only consulted when a vehicle is already showing signs of malfunction.
The Magnuson–Moss Warranty Act is a United States federal law. Enacted in 1975, the federal statute governs warranties on consumer products. The law does not require any product to have a warranty, but if it does have a warranty, the warranty must comply with this law. The law was created to fix problems as a result of manufacturers using disclaimers on warranties in an unfair or misleading manner.
An automobile repair shop is an establishment where automobiles are repaired by auto mechanics and technicians. The customer interface is typically a service advisor, traditionally called a service writer.
A home warranty is a contract that agrees to provide a homeowner with discounted repair and replacement services. However, the words "home warranty" are not always used explicitly to mean a legal warranty is being conveyed. In many cases, at least in the United States, a home warranty is not a warranty at all, but rather a home service contract that covers the repair and/or replacement costs of home appliances, major systems such as heating and cooling, and possibly other components of a home, structural or otherwise. Coverage varies significantly across home warranty companies.
AppleCare+ is Apple's brand name for extended warranty and technical support plans for their devices. AppleCare+ extends the devices' one-year limited warranty and the ninety days of technical support. It allows the customer unlimited incidents of accidental damage with a deductible. AppleCare+ is available for many Apple products, including Mac computers and displays, Beats headphones, HomePods, iPhones and iPads, Apple Watches, and Apple TVs. AppleCare+ plans include Apple software associated with the covered hardware.
In retail, a product return is the process of a customer taking previously purchased merchandise back to the retailer, and in turn receiving a refund in the original form of payment, exchange for another item, or a store credit.
Eight dimensions of quality were delineated by David A. Garvin, formerly C. Roland Christensen Professor of Business Administration at Harvard Business School, and may be used at a strategic level to analyze product quality characteristics. Garvin, who died on 30 April 2017, was posthumously honored with the prestigious award for 'Outstanding Contribution to the Case Method' on 4 March 2018.
Right to repair is a legal right for owners of devices and equipment to freely modify and repair products such as automobiles, electronics, and farm equipment. This right is framed in opposition to restrictions such as requirements to use only the manufacturer's maintenance services, restrictions on access to tools and components, and software barriers.