FSP 1.1: price vs warranty

April 03, 2004

price vs warranty

When buying online, consumers should check both the reseller's return policy and
the manufacturer's warranty. Refurbished products often have shorter warranties
than new products. HPshopping.com, for example, which sells both new and
refurbished Hewlett-Packard merchandise, provides a 90-day warranty on
refurbished desktop PC's, compared with one year for new products. KitchenAid
backs its refurbished small appliances for six months, versus a year for new
ones.

Shorter warranties help keep the price down.

"We believe that our typical refurbished customer is less sensitive to the length of
the warranty and more sensitive to price," offered Elaine Gasser, a marketing
manager at Hewlett-Packard.

Sheldo Fingerman, 56, a computer consultant from Aspen, Colo., says he can
accept a shorter warranty if the savings are substantial. The refurbished
Panasonic digital voice recorder he bought online two years ago is still going
strong, he said, despite the abuse it takes riding around in his pocket. The only
indication that it has been refurbished is a small "2" engraved on its case, he
added.

"I always weigh the warranty that they are giving for the refurbished unit against
the price," he said. "If I can buy something that retails for $100 for $50, and it
has a 90-day warranty instead of a one-year warranty, my feeling is that it's a
pretty good gamble."

A browse through secondary-market Web sites turns up two popular claims: that
refurbished products are often better than new ones because they undergo more
rigorous inspection and testing, and that the defect rate of refurbished products is
far lower than that of items sold as new. Several of the sites contacted could not
provide statistics to back up those claims.

But Mr. Gomer said that the lower rates made sense, "because they test
everything before it is sent out; defects are all weeded out on
manufacturer-refurbished products."

(NYT)

Posted by dc at April 3, 2004 05:04 PM | TrackBack

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