Service Contracts
The December 20th BusinessWeek covers "The Warranty Windafall."
While service contracts are only 3-4% of sales, they may represent 45-100% of profits at electronics stores.
You don't need a service contract on most electronics because of the U-shaped Wiebull curve: Electronics either fail early (covered by the basic warranty) or not for 300,000 hours or more.
By the time they do fail, there will be newer models with more features available at cheaper prices.
PCs, for example double in performance and halve in price every 18 months.
What does BusinessWeek suggest getting service contracts on?
Anything that runs hot: laptops and plasma TVs.
Save money by skipping the service contract and use it to buy the next generation.
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