Service Contract Pricing: Ranges:
The average range extended warranty cost 10.5% of the total appliance price, the lowest we've seen in this series. We found range protection plans ranging in price from $25 to $2,250, from one to eight years in length.
Last week, we found that dishwasher service contracts cost, on average, 16% of the appliance price. This week, we found that the average range extended warranty cost 10.5% of the appliance price.
As we posited last week, extended warranties protecting more expensive appliances tend to cost an overall lower percentage of the total appliance price. This is even true of the extended warranties that cost thousands of dollars; a $2,000 service contract still only costs 13% of a $15,000 appliance.
In our research for this newsletter series, we've noticed that extended warranty pricing models come under the most stress with low-cost appliances. As we will see in Figure 10 of this newsletter, a $400 eight-year extended warranty protecting a $700 appliance still costs 57% of the appliance price. At that point, the vast majority of customers would likely opt to replace the appliance in the event of a malfunction.
The prices of these extended warranties are based on algorithms, which in turn are based on intricate actuarial formulas and calculations. Certainly, every extended warranty pricing model has its upsides and downsides, often tested at the extremes.
Methodology
We gathered data about 236 different range extended warranties.
We collected data for gas and induction ranges. We excluded coil electric ranges because they typically are similar in price and style to the gas versions. While the induction ranges are also electric, the smooth cooktop bumps up the price of the appliance.
We excluded data for any ranges intended for commercial use. We also excluded most dual-oven models, again to simplify our data set. We did include data on some "professional style" ranges, which are coveted in high-end home kitchens, but smaller than models intended for commercial use. The ranges for which we collected data varied from 24 to 48 inches in width.
We gathered data on four to six ranges sold by each retailer, including at least two gas and two induction ranges. We collected data on the most and least expensive range of each type. We also gathered data on one or two ranges in the middle of the highest and lowest price. See Figure 2 for more information on the prices of the ranges.
Extended Warranty Online Retailers
We gathered data on range extended warranties sold by 24 different online retailers, half nationwide U.S. retailers, and half regional retailers selling service contracts in just one or a few U.S. states.
The national retailers were: Amazon, Best Buy, Frigidaire, GE Appliances, Home Depot, KitchenAid, LG, Lowe's, Maytag, Menards, Samsung, Walmart, Wayfair, and Whirlpool.
The regional retailers were: ABC Warehouse [MI], Abt Electronics [IL], Big Sandy Superstore [KY, OH, WV], BrandsMart USA [FL], Electronic Express [TN], Jetson TV & Appliance [FL], Orville's Home Appliances [NY], P.C. Richard & Son [NY], RC Willey [UT, ID, NV], and Warners' Stellian [MN, IA, MO].
Survey Results
First, we'll present some initial results of our survey of gas and induction range extended warranties sold by online retailers. Figure 1 shows the brands of the ranges for which we gathered data.
Figure 1
Brands of Ranges Surveyed
50 of the ranges were made by GE, typically found at the low side of the price spectrum for gas ranges. 33 ranges were made by Frigidaire, which was a common induction range brand offered by many of the online retailers we surveyed.
Of the 48 ranges in the "Other" category, 10 were made by Miele, 10 by Viking, six by Monogram, five by Thermador, three by Thor, two by Criterion, one by Kenmore, and one by Rangaire.
Figure 2 shows the price intervals of the gas and induction ranges we surveyed.
Figure 2
Price of Ranges Surveyed
56 ranges cost between $649 and $1,000, and 67 ranges cost between $1,000 and $2,000. In total, 113 ranges cost $2,000 or more.
In this data set, the most expensive appliance was a $17,999 gas range, and the least expensive was a $649 gas range.
Figure 3 shows the length of the extended warranties attached to the ranges for which we collected data.
Figure 3
Length of Service Contracts Offered
The most common extended warranty length was three years, followed closely by five years.
The retailers offering one-year service contracts were all OEM online shops, and these plans all begin after the manufacturer's warranty expires (see Figure 4). The online retailers offering one-year extended warranties were: Frigidaire, GE Appliances, KitchenAid, LG, Maytag, and Whirlpool.
LG and GE Appliances both offered two-year contracts as well. Aside from those two, all of the two-year protection plans started at the date of purchase.
Figure 4 shows the start date of the range service contracts.
Figure 4
Service Contract Start Date
182, or 77%, of the range protection plans we surveyed started at the date of purchase, while the remaining 54, or 23%, of the plans started after the expiration of the manufacturer's warranty.
The plans sold by Frigidaire, GE Appliances, KitchenAid, LG, Maytag, and Whirlpool all begin after the manufacturer's warranty expires.
Service Contract Administrators, Obligors, and Underwriters
The sample of regional retailers in this survey include several that administrate their own in-house extended warranties and local repair networks. These retailers are: ABC Warehouse, Abt Electronics, Big Sandy Superstore, Electronic Express, Jetson TV & Appliance, P.C. Richard & Son, RC Willey Home Furnishings, and Warners' Stellian. In addition, Electronic Express uses local company Alliance Warranty Solutions, and Warners' Stellian uses local company Ironclad Home Services.
Assurant provides the protection plans sold by Best Buy, Lowe's, GE Appliances, and Samsung. Allstate provides the plans sold by Home Depot, Menards, Walmart, and Wayfair. Asurion provides the plans sold by Amazon and LG. Domestic & General USA provides the plans sold in the online retail shops of Whirlpool, Maytag, and KitchenAid, all owned by parent company Whirlpool Corp.
Please take a look at last week's newsletter, "Service Contract Pricing: Dishwashers" for more information on the administrators, obligors, and underwriters behind the appliance protection plans detailed in this newsletter.
One-Year Service Contracts
To create the following charts, first we calculated the ratio between the extended warranty price and the appliance price, as a percentage. Next, we plotted the price of each service contract, compared to each percentage.
Figure 5 shows the prices of the one-year extended warranties, compared to the percentage ratios.
Figure 5
One-Year Service Contracts:
Price of Service Contracts Offered
(as a percentage of range price)
At the low side of the price pairings, we found a $107 one-year Appliance Protection Plan from Frigidaire, provided by OnPoint, which began after the expiry of the limited warranty, and cost 1.6% of the price of the $6,499 induction range it protected.
At the high end, we found a $36 one-year Domestic & General Protection Plan from Whirlpool, which began after the manufacturer's warranty expires, and cost 5.5% of the $659 gas range it protected.
The average one-year range extended warranty cost just 3.5% of the appliance price. Thus, 12 plans were below average, and six plans were above average.
Two-Year Service Contracts
Figure 6 details the two-year range extended warranties.
Figure 6
Two-Year Service Contracts:
Price of Service Contracts Offered
(as a percentage of range price)
At the low side, there was a $200 two-year Lowe's Protection Plan for Ranges, provided by Assurant, which began at the appliance date of purchase, and cost 2.9% of the $6,899 gas range it protected.
At the high side, there was a $120 two-year Ironclad Product Protection from Warners' Stellian, which began at the date of appliance purchase, and cost 14% of the $830 gas range it protected.
Amazingly, we found a two-year gas range extended warranty that cost $900, sold by Electronic Express. This plan protected a $9,299 Thermador range, meaning the extended warranty cost 10% of the total appliance cost. This same range also produced the most expensive extended warranty in the three- (Figure 7), four- (Figure 8), and five-year (Figure 9) service contract categories of our data set, peaking at $2,250 for the five-year extended warranty.
The average two-year range protection plan cost 6.8% of the appliance price. 18 plans were below average, and 14 plans were above average.
Three-Year Service Contracts
Figure 7 shows the price pairings for the three-year extended warranties, the most common service contract length for ranges.
Figure 7
Three-Year Service Contracts:
Price of Service Contracts Offered
(as a percentage of range price)
On the low side, we found a $105 three-year Wayfair Protection Plan, provided by Allstate, which cost 1.5% of the $6,999 gas range it protected.
On the high side, we found a $150 three-year Appliance Performance Protection Plus plan from Big Sandy Superstore, which cost 21% of the $699 gas range it protected.
The average three-year range extended warranty cost 8.7% of the total appliance price. Thus, 44 plans were below average, and 34 plans were above average.
Four-Year Service Contracts
Figure 8 shows the price pairings for the four-year service contracts.
Figure 8
Four-Year Service Contracts:
Price of Service Contracts Offered
(as a percentage of range price)
At the low side, we found a $380 four-year Bodewell Care Protection Plan from GE Appliances, provided by Assurant. This is one of the few longer extended warranties we found that began at after the manufacturer's warranty expired; this particular range comes with a one-year limited warranty, meaning five total years of coverage with the purchase of the four-year extended warranty. The protection plan cost 8% of the $4,599 total cost of the induction range it covered.
At the high side, we found a $189 four-year Abt Local Extended Protection Plan from Abt Electronics, which cost 24% of the $799 gas range it protected.
The average four-year range protection plan cost 14% of the total appliance price. 11 plans were below average, and 11 plans were above average.
Five-Year Service Contracts
Figure 9 shows the price pairings for the five-year range extended warranties.
Figure 9
Five-Year Service Contracts:
Price of Service Contracts Offered
(as a percentage of range price)
At the low side, we found a $160 five-year Wayfair Protection Plan, provided by Allstate, which cost 2.3% of the $6,999 Viking gas range it protected.
At the high side, we found a $230 five-year Extended Service Protection Plan from P.C. Richard & Son, which cost 33% of the $700 gas range it protected.
The average five-year range extended warranty cost 13% of the appliance price, slightly lower than the average for the four-year plans. 44 five-year extended warranties were below average, and 33 plans were above average.
Seven- & Eight-Year Service Contracts
Finally, Figure 10 shows the price pairings for the seven- and eight-year extended warranties, which were less common. Samsung offered the only seven-year plans in our data set, and P.C. Richard & Son offered the eight-year plans.
Figure 10
Seven- & Eight-Year Service Contracts:
Price of Service Contracts Offered
(as a percentage of range price)
At the low side, we found a $900 eight-year Extended Service Protection Plan from P.C. Richard & Son, which cost 6.9% of the $13,100 Miele gas range it protected.
At the high side, with the highest ratio in our whole data set, we found a $400 eight-year plan from P.C. Richard & Son, which cost 57% of the $700 gas range it protected.
The average seven- or eight-year range extended warranty cost 21% of the appliance price. Five plans were below average, while four plans were above average.
