Hello. I have come seeking the wisdom and council of the EE sages.
This is more a business operations question rather than a technical question. I'm looking for advice and wisdom on setting up warranty and maintenance agreements for some industrial equipment we're trying to sell. Unfortunately as a young engineer I don't have much personal experience and I don't have many veterans in my network particularly those experienced with industrial equipment so I thought I'd send out an open call for help here where there's a diverse wealth of knowledge and experience on all ends of the equation: equipment providers, maintenance techs/subcontractors and equipment end-users.
My limited understanding right from the very basics so far is as follows:
- Warranties need to be in place so customers don't get screwed buying lemons that break before they've provided a return on investment
- Providers need to:
- a. Make sure the equipment they're selling isn't a lemon and can actually provide return on investment
- b. Not overstretch selling a warranty they can't back up
- If you screw up your warranty then:
- a. Its too low and nobody is going to be confident buying your equipment
- b. Its too high and you'll screw yourself with costs of supporting something unreasonable
So ideally you'd just make a good product that lasts as long as it needs to for it to be worth its cost and then warranty it for that long... but that's not always as simple as it sounds. In particular (for us) coming out with a new product that neither we nor anyone else has on the market for a point of reference; all we can do is compare to older sort of analogous products. Design and test as much as you can but its hard (impossible) to guarantee something will work the way its intended
reliably for some given duration before its actually been out there and in the world for that time and subject to potential misuse, abuse and god knows what other things you didn't foresee during design. Its a bit of a chicken and egg situation in terms of getting a product off the ground.
So far as overcoming the challenges of setting up a good warranty you've got a few options I'm aware of.
- Just send it, warranty it as best you can estimate then hope people buy it and nothing horrible outside your expectations happens
- Setup a variable warranty plan with the option to extend warranty with the purchase of an annual maintenance agreement
- Don't even sell your product and instead provide it through a lease/HaaS (hardware as a service)
Now the last option of leasing isn't appealing to everyone so we still need to provide the option to purchase outright and provide an associated warranty. Hedging your bets by doing an extendable warranty plan with a maintenance agreement sounds more safe to me than just sending it with singular fixed warranty. Problem for me here is I know even less about setting up the logistics of a maintenance agreement, finding subcontractors (no way we're gonna be able to provide decent first-party service globally), making service documentation and training material, keeping everyone in the chain honest and up to scratch, and ultimately costing. Its a whole different ball game to just estimating costs of production/replacement of hardware. There's also the potential "darkside" of lost revenue from making hardware last too long and/or cost too much with extended life maintenance. A simple way to deal with this would be to just charge high maintenance fees which generate a safe profit margin but I know how I and a lot of other people around here feel about exorbitant servicing fees.
Really scratching my head and it feels like there's no simple answers other than doing what we can to improve our odds then just taking the plunge.
Please share your wisdom and advice, stories and experience dealing with warranties and maintenance agreements: as providers, as customers and in the middle as service techs.Also feel free to PM me if there's more private experience you'd be willing to share and I can also go into a bit more detail on our own issues.