Warranties - what do you cover?

[HCHTech]

I'm re-evaluating the warranty coverage I provide on workstations we build for customers. Historically, we have given the full manufacturer's warranty on any parts used, and we didn't charge for our labor to replace the part. Typically, though, we have charged for a service call if we go onsite to diagnose a problem that turns into a warranty job.

All in all, we haven't had that many incidents of warranty claims, but we're getting more of them as we sell more stuff, so I want to make sure our policy is clear and resonable (for both us and the customer).

For normal work, we charge hourly. We have one rate for residential clients and a higher rate for commercial clients. We have a one-hour minimum for all service calls. Also, for commercial clients, we have a travel charge.

So here is a recent chain of events that ended up being a warranty job.

1. We build a high-end workstation for one of our commercial clients (CAD capable - fast processor, AutoCAD-approved video card, 32GB RAM, 512GB Pro SSD, 27" monitor, etc.) probably just a bit over $2K with MS Office.

2. 6 months later, they report an unusual symptom that sounds like it is a software problem. We charge our regular rate for a service call to troubleshoot the issue. It's not reproducable, but a BIOS update is loaded as well as a new driver. Customer pays the bill.

3. A few weeks later, the problem returns. This time, we do a remote session to do some troubleshooting. We open a ticket with the motherboard vendor and they issue an RMA ticket. Apparently there is a known issue with the motherboard.

4. The replacement motherboard arrives (a refurb, of course) and we arrange a time to go pickup the machine and swap the motherboard over the weekend.

5. We go onsite to pickup the workstation at the end of the day on Friday, bring it back to the shop, swap the motherboard, do a full hardware test & burn-in, then return it to the customer on Monday morning.

Under our current policy, we charged for the initial call when the problem was first reported, but didn't charge for anything after that. That included a remote session, the time spent opening a support ticket with the manufacturer, an onsite visit to pick up the workstation, the time to swap the motherboard (and the time to package and send back the part to the manufacturer) and finally another onsite visit to reinstall the repaired workstation.

Historically, we only have a couple of these a year, so we eat it all in the name of good service. Just because our volume is greater now, we are seeing more warranty issues, and I think we're giving away too much with our current policy. If it matters, we don't have a storefront, my office & shop are in my home.

Ideas for changes include:

• Split the labor for warranty work (essentially a 50% discount on labor)
• Bill only the travel fee when onsite visits are required as part of a warranty repair (this would encourage them to bring us the computer)
• Only parts are covered, all labor is billable just like normal

Complications to consider:

• For parts we normally stock, we will often replace the bad part with a new one from stock, then handle the RMA with the vendor on our own time. This minimizes turnaround for the client, but almost always means we get stuck with a refurb part that we can't really sell to a customer, so it ends up waiting for another warranty failure of that same part (unlikely), or being used in one of the shop computers.
• We don't have many warranty claims, so I don't want to risk the client relationship over a $150 motherboard.

How do you handle warranty repairs like this? Do you include any labor at all in your coverage? Do you handle warranties different for residential vs. commercial customers?

 

[sapphirescales]

We have a 30 day parts AND labor warranty to make sure they don't get a lemon. After that the manufacturer warranty takes over and we'll still charge for any and all labor. What we do with the parts is we replace the part immediately, charge the client for the replacement part, take their old part, RMA it with the manufacturer. When the replacement part comes in we refund the card or send a check for the amount they paid for the replacement part.

A few clients have complained about this policy, but not many. We just tell them that it sucks that the part failed, but we can't work for free and that they're free to take it to the manufacturer if they want to wait 6+ weeks to get the system back (HINT: NO ONE takes this option). Most are very understanding.

Just yesterday a mining rig that I'd built about 6 months ago wouldn't POST. He brought it in and it turned out to be a dead stick of RAM of all things. So we popped in a new stick. He did however have to pay for the diagnostic, which more than covers the cost of a new 4GB DDR4 memory stick. Now we'll just RMA the bad stick and get a replacement that we can keep in stock in the shop.

 

[HCHTech]

nd get a replacement that we can keep in stock in the shop.

Ignoring the labor discussion, this is the same basic thing we do. Trouble is, they almost always send a refurb, which you can't sell as new, obviously. Do you offer the refurb part at a discount to future customers? If so, do you give a parts warranty on THAT? From the manufacturer's standpoint, the most warranty that you get on a refurb replacement is the balance of the original warranty. We don't even try to track that, and basically only use the refurb parts in machines/repairs we do pro-bono or use directy in the shop...

 

[sapphirescales]

Ignoring the labor discussion, this is the same basic thing we do. Trouble is, they almost always send a refurb, which you can't sell as new, obviously. Do you offer the refurb part at a discount to future customers? If so, do you give a parts warranty on THAT? From the manufacturer's standpoint, the most warranty that you get on a refurb replacement is the balance of the original warranty. We don't even try to track that, and basically only use the refurb parts in machines/repairs we do pro-bono or use directy in the shop...

Exactly. If we get a refurb back, we either put it into a used computer that we're selling, or if it's a nicer part we resell it on eBay. Just got an AX860i power supply back from Corsair. That's an almost $300 power supply, so not something we're going to stick in the Dell Inspiron refurb we have lying around. I listed it on eBay and it sold for $220. Still, I think we paid $260 for it. This is where the diagnostic + labor comes into play. We got about $150 in profit from the diagnostic & labor, so we actually still made a profit when we sold the power supply for $220 (about $200 minus eBay/PayPal fees and shipping). So a total of about $350 from a $260 part, or a real profit of about $90. Of course there's a lot of work involved including putting the new power supply in, diagnosing the old machine, listing the replacement part, packing it, shipping it, etc. That's what that $90 helps to cover. So in the end I suppose we just about broke even.

 

[Mr. Ingram's Computer Repair & Shoppe]

probably just a bit over $2K with MS Office.

be right back.... there are to many funny things in this one line of text

1. "probably" followed by a $$$
2. "With MSO" as if the build was $1900 and then they were like. Oh, we need MSO too.
3. I don't know.... It just made me giggle...

2. 6 months later, they report an unusual symptom that sounds like it is a software problem. We charge our regular rate for a service call to troubleshoot the issue. It's not reproducable, but a BIOS update is loaded as well as a new driver. Customer pays the bill.

Would of done something similar here too. So far, we are on the same page.

(a refurb, of course)

This annoys me about warranty replacements...

5. We go onsite to pickup the workstation at the end of the day on Friday, bring it back to the shop, swap the motherboard, do a full hardware test & burn-in, then return it to the customer on Monday morning.

Did it fix their problem? Or still playing the waiting game to see if the problem returns?


SOOOOOOOOOOOO just reading the OP, and skipping everything else. Here's how I do it in my shoppe.
refurbs/shelf computers (ones I got that are refurbished, or donated and refurbished by me) I sell with a 30-day full moneyback guarantee that I am able to reject for any damage done to the computer, parts missing, or used improperly.

On custom builds/build to order.
I offer a 1-year warranty on all hardware that is not cosmetic damage. "I will make sure it runs for a year, I do not make sure it looks pretty for a year" parts and labor free.

if it is user error based, I charge for parts and free labor with drop-off, otherwise they get a pickup/dropoff fee.


So that's the hardware side.

Software wise, I do not have any warranty.

I charge for software install and setup.

If you buy a computer from me, within the (30-day or 1-year) you can bring it in and I will do driver/bios for free only.

virus/malware/"my email is acting funny" is all charged even under warranty.

 

[HCHTech]

I guess the whole thing that is giving me pause here is two-fold:

1. If a problem is originally addressed, billed and paid that later turns into a warranty issue, is it reasonable for the customer to expect that I would refund the charges levied for the original attempt? They haven't asked, but I'm just carrying the thought process to it's logical conclusion. With a motherboard that has a 3 year warranty, for example, that puts an awfully long tail on invoices. I think the answer here is "no", unless the problem returned immediately after the attempt (or the attempt identified it immediately as a hardware issue that would be covered by warranty).

2. With commercial customers where pickup and dropoff is included (and billed) in normal service, how many visits do they get as part of a warranty issue? In my recent case, we had an onsite call for the original issue, time spent with remote diagnosis, pickup after hours on Friday, repair over the weekend, delivery & setup on Monday morning. From my standpoint, I'm looking at the total hours here and thinking there is no way I'm refunding the original service call. If I put myself in my customer's shoes, however, the problem certainly wasn't their fault, so why should they have to pay anything? They already paid top-dollar for a custom-built workstation 6 months ago.

If this were a Dell or HP machine, they would have had (optimistically) a couple of hours of telephone diagnosis, then a tech would have been dispatched with a motherboard (hopefully they guessed right in the diagnosis and didn't show up with a video card the first time). The machine would have been out of service during working hours for the repair, which would add downtime for that employee to the cost. So in the end, it wouldn't have cost them any currency, but 4 hours of downtime ain't free.

I don't want to get into the situation where I'm treating different commercial customers differently based on their profitability or revenue or something (but I would have no problem treating residential customers differently than commercial). Also, maybe I'm obsessing about this too much. As a percentage of sales, we really don't have that many warranty issues - maybe I should just do the most customer-favorable thing and get on with it.

 

[sapphirescales]

I guess the whole thing that is giving me pause here is two-fold:

1. If a problem is originally addressed, billed and paid that later turns into a warranty issue, is it reasonable for the customer to expect that I would refund the charges levied for the original attempt? They haven't asked, but I'm just carrying the thought process to it's logical conclusion. With a motherboard that has a 3 year warranty, for example, that puts an awfully long tail on invoices. I think the answer here is "no", unless the problem returned immediately after the attempt (or the attempt identified it immediately as a hardware issue that would be covered by warranty).

2. With commercial customers where pickup and dropoff is included (and billed) in normal service, how many visits do they get as part of a warranty issue? In my recent case, we had an onsite call for the original issue, time spent with remote diagnosis, pickup after hours on Friday, repair over the weekend, delivery & setup on Monday morning. From my standpoint, I'm looking at the total hours here and thinking there is no way I'm refunding the original service call. If I put myself in my customer's shoes, however, the problem certainly wasn't their fault, so why should they have to pay anything? They already paid top-dollar for a custom-built workstation 6 months ago.

If this were a Dell or HP machine, they would have had (optimistically) a couple of hours of telephone diagnosis, then a tech would have been dispatched with a motherboard (hopefully they guessed right in the diagnosis and didn't show up with a video card the first time). The machine would have been out of service during working hours for the repair, which would add downtime for that employee to the cost. So in the end, it wouldn't have cost them any currency, but 4 hours of downtime ain't free.

I don't want to get into the situation where I'm treating different commercial customers differently based on their profitability or revenue or something (but I would have no problem treating residential customers differently than commercial). Also, maybe I'm obsessing about this too much. As a percentage of sales, we really don't have that many warranty issues - maybe I should just do the most customer-favorable thing and get on with it.

The bottom line is this. Unless you're at fault (didn't set up the hardware/software correctly, damaged the hardware when installing it, etc.), then you shouldn't be punished. It is however your responsibility to take care of your customer. Your labor is NOT covered under warranty, only the hardware is. So you replace the hardware for "free" but you charge for your labor to configure and install it.

To avoid upset customers, I always warranty my work indefinitely. If I screwed something up and it bit them in the butt even YEARS later, I cover it. A week ago I got in a custom built computer that I'd built about four years ago. The motherboard wasn't properly lined up with the back I/O. When I looked at it, I hadn't installed the motherboard correctly. The thing was glitchy and the board was showing signs of being bad. Since I never installed it correctly (which is possible - I was REALLY busy back then and was taking on more work than I really could due to an employee shortage at the time), I decided to replace it for free. My client insisted on giving me a $100 bill for my trouble. It didn't quite cover the new board, but we both felt good about it in the end.

 

[HCHTech]

Did it fix their problem? Or still playing the waiting game to see if the problem returns?.

It appears to have fixed the problem, but since it took 6 months for the problem to surface in the first place, I'm definitely not convinced yet.

On custom builds/build to order.
I offer a 1-year warranty on all hardware that is not cosmetic damage. "I will make sure it runs for a year, I do not make sure it looks pretty for a year" parts and labor free.

What do you do if the part itself has a longer-than-1-year warranty? Do you pass that on to the customer? Samsung Pro SSDs, for example have a 10 year (!) warranty. A regular Samsung SSD has a 5 year warranty. APC UPS units have a 3-year warranty, etc. etc. - In my book, this seems mandatory.

 

[Mr. Ingram's Computer Repair & Shoppe]

What do you do if the part itself has a longer-than-1-year warranty?

I give them the all the boxes/manuals/everything that comes with the order and tell them about the manufacturer warranty. Never had anyone that looked interested in warranties outside of mine.

 

[Your PCMD]

We have a 30 day parts AND labor warranty to make sure they don't get a lemon. After that the manufacturer warranty takes over and we'll still charge for any and all labor.

^ This is a good and general example. Mine is slightly different:

At Your PCMD, we value our clients and are about ensuring that we delivery quality hardware and professional services to our clients at competitive prices. We have a 15 day warranty on labor and 30 day warranty policy on hardware. All warranty issues after 30 days of purchase are handled directly between the customer and the manufacturer.

Software repair &/or Services have a 2 day warranty. If within 2 days after our technician has completed their work you experience the same technical issues as those that you first reported to us, or that the work carried out by our technician prevents you from using your computer, contact us and we'll provide up to 2 hours labor for FREE. If diagnostics &/or fixes take longer, normal billing rates will apply.

Now then, this is just a rule, and like any rule, they can and do get broken. I'll take care of great customers, even beyond the warranty period (but not too far beyond). But when a customer is immediately irate or I know that they want something else for free that has nothing to do with the original service, then this notice becomes rock solid. Plus it weeds out most of the customers that just want something for free &/or in addition to.

 

[fencepost]

One thing I'm planning on including as an option on new service plans is that above a certain level it includes dealing with vendors (other than us). If you're on the "rusty nail" plan, every minute of time spent on the phone, packaging, shipping, etc. will be billable. If you're on the gold-pressed latinum plan, you'll already be paying me to deal with support.

Edit: in making some notes to remind myself of this, I'm also contemplating whether that should be 2-tiered - one for hardware, networking, etc. and a separate one for LOB apps? But I'm thinking business apps should always be billable - just needs to be noted as such in agreements.

 

[HCHTech]

I think these are all good examples when it comes to selling 'a part' to an individual or residential customer. When you are dealing with a commercial customer, with whom you have an ongoing relationship (not to mention thousands of dollars in billings per year), and you sell them a custom-built computer, then things have to be different. They are buying a computer, not a list of parts. I believe they expect (and deserve) a higher level of service because of that relationship.

In the past, for the couple of warranty issues that came up during the year, we would just do whatever it took to get the machine working again with as little downtime as possible for the customer. We never (or almost never) charged for labor at all. Because we had so few incidences, this policy never really came into question. I considered it part of the cost of doing business, and the goodwill it generated (I hope) far outweighed the cost of providing that level of service. We never really had it in writing, and nobody ever asked. I always said "we give the full manufacturer's warranty on parts and usually don't charge for the repair". That's as far as it went.

We are selling a lot more machines now than we have in the past - and, as a result, more things have come up. That's why I'm looking to solidify the process and get it down in writing so there isn't any question of our process. While thinking it through, I want to be careful not to give away the store. I guess that lands me somewhere in the middle. I think "any and all labor is billed for a warranty claim" is too harsh, and "we never bill for labor with a warranty claim" is too lenient. I appreciate everyone sharing their policies - I'll have to come up with my own Goldilocks zone on this one, I think. Maybe they get the white-glove treatment for 12 months, with labor charges applying after that point, I don't know.

 

[sapphirescales]

I think "any and all labor is billed for a warranty claim" is too harsh, and "we never bill for labor with a warranty claim" is too lenient.

It's up to you to decide what your market and clients will support. If you want, you can sell them an extended warranty. That's what we do (ONLY on custom built computers). $99 for a 3 year 100% parts & labor warranty. Hardware failure is so rare on custom computers if you build them right. Or you can include a 3 year warranty for FREE for businesses that are on a managed service plan.

In the past I've also worked with sliding scale warranties, and warranties with a deductible (check with your state laws regarding advertising it as a deductible). A 3 year parts & labor warranty is included with a $199 deductible. Or labor is covered 100% in the first month, 75% in year 1, 50% in year 2, and 25% in year 3. Though I should warn you that sliding scale warranties are difficult for most stupid clients to grasp. You can end up being perceived as dishonest/sneaky if you use them. I much preferred using the deductible, as everyone understands what that is, and readily accepts it.

Personally I've dropped the deductible and the sliding scale method and warranty parts and labor 100% for 30 days, then the part is warrantied by the manufacturer for the remainder of their warranty, but if a failure occurs, they have to pay me or someone else to put the part in.