Extended Warranty Value
Decide if an extended warranty is worth its price.
About Extended Warranty Value
An extended warranty is a good bet only if its price is below the expected cost of the repairs it would cover. Warranties are priced to profit the seller, so they are usually poor value unless you expect an unusually high failure rate.
Formula
Extended Warranty Value
Expected repair = repair cost x chance of repair
- expected repair
- The repair cost weighted by its probability
Worked example
With the default values below, Extended Warranty Value returns Expected Repair Cost of $26.40. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Product price
- 700
- Warranty price
- 120
- Chance of repairaccepts 0–100 %
- 12 %
- Typical repair cost
- 220
Results
- Expected Repair Cost
- $26.40
- Warranty Share of Price
- 17.14%
- Verdict
- Repair risk may justify coverage
Step by step
- 1Values used
- 2Extended Warranty Value
- 3Expected Repair Cost= 26.40
- 4Warranty Share of Price= 17.14
- 5Verdict= Repair risk may justify coverage
Assumptions and limits
- The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation, tax or compounding frequency into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
How is Extended Warranty Value calculated?
Expected repair = repair cost x chance of repair An extended warranty is a good bet only if its price is below the expected cost of the repairs it would cover.
Why does Extended Warranty Value matter?
Warranties are priced to profit the seller, so they are usually poor value unless you expect an unusually high failure rate.
What values do I need to enter?
This calculator takes 4 inputs: Product price, Warranty price, Chance of repair, Typical repair cost. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.