According to Warranty Week, extended warranties are a $40 billion business. Manufacturers make lucrative margins on warranties, because they know that most people will never take them up on the offer. For personal electronics, extended warranties aren’t usually worth the money because the chances of needing a repair are low; the cost of repairs or even replacement isn’t significant; and you can usually live without the item for a while.
However, when you’re considering computer warranties for your business, you have completely different factors to consider. For that reason, we almost always recommend getting the extended warranty.
For workstations we recommend three year warranties, and on servers we recommend five. Most computer manufacturers will allow you to renew the initial warranty twice. After five years, most equipment is beyond its serviceable life and should be considered for replacement.
Why extended warranties on business computers are different
We think of warranties as the cost of doing business. Just like you wouldn’t buy a car without car insurance, buying computer equipment without a warranty is risky. For many reasons.
1. Computer equipment is vital to business operations
If your server goes down and employees can’t work, you’re losing far more money than you would have paid for the warranty.
Without access to the same-day service warranty offered by the manufacturers, you may be waiting days or weeks for repair. If the server requires replacement, it will probably take two to three weeks for it to be delivered and configured.
In another scenario, we have a client that travels regularly for business (at least they did before the pandemic). Their risk of damage or loss is significantly higher than the average laptop user and the client didn’t want to risk losing a high-value client by not having a laptop. Getting the manufacturer’s extended warranty meant getting same day service or replacement, wherever they are in the world.
2. Parts aren’t always available
Manufacturers typically keep an inventory of components exclusively available to their warranty customers. For older equipment, you may not even be able to buy the part on the open market. Equipment over five years old is usually no longer supported.
3. The cost of replacement is high
A manufacturer’s original warranty is typically three years, but business computers are usually replaced every five years. For that reason, businesses are usually allowed to renew their hardware warranty to cover all five years. Investing in a server is a capital expense you can build into your business budget. When a server has to be replaced mid-way through its expected life, it means another large cash outlay. Plus, the costs can compound substantially because you also reconfigure other network components.
4. Service costs
The manufacturer warranty includes professional services. A manufacturer rep will repair the equipment and bring it up to date with the latest software and security patches.
What happens if you never need the extended warranty?
Count yourself lucky! Just like you don’t want to get in a car crash to get value from your car insurance, the extended warranty provides peace of mind and protection for your business.
Businesses should continually be evaluating how to lower their risk. Buying extended warranties for computer equipment is one way. Doing regular business backups is another. And having an IT Partner you can rely on is the third.
If you’re looking for better IT service or support, please give us a try. Our small team is right-sized for growing businesses. We’re based just outside of Detroit Michigan, but ready to service companies anywhere in the USA.
Frequently Asked Questions
Is it worth getting a warranty on a laptop?
Laptops take a lot more wear and tear than desktop computers. They’re more likely to be dropped or get liquids spilled on them. If you have a business laptop that’s vital to operations, it’s wise to invest in a warranty for your laptop.
Should I buy the extended warranty for my computers?
The extended warranty is usually much less expensive than the original warranty. It’s up to you, but if you need same day replacement, it is worth the investment.
Don’t computers come with a warranty?
All new computers come with a manufacturer’s warranty, which typically last about a year, but it only covers manufacturing defects – not other types of damage or loss.