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Calcimator

Warranty Value Calculator

Determine if an extended warranty is worth the cost based on item failure rates, repair costs, and warranty price.

Expected Value of Warranty

-$42.54

Worth It?

0

Inputs

$
$
years
% / yr
$

Comparison

Expected Repair Cost (No Warranty)

$77.46

Warranty Cost

$120.00

Break-Even Failure Rate

13.1%

Annual failure rate at which the warranty becomes worth it

Financial Summary

How to Use This Calculator
  1. Enter the Item Price and the Warranty Cost for the extended protection plan.
  2. Enter the Warranty Length in years and your Estimated Annual Failure Rate.
  3. Enter the Average Repair Cost if a failure occurs without warranty coverage.
  4. Review Expected Value of Warranty — a negative value means the warranty costs more than the expected benefit.
  5. Check Break-Even Failure Rate and the Worth It recommendation to decide whether to purchase coverage.

How the result changes with Warranty Cost

Warranty CostExpected Value of WarrantyWorth It?
$1,000.00-$922.540
$3,500.00-$3,422.540
$6,500.00-$6,422.540
$9,000.00-$8,922.540

What each input means

Item Price
Purchase price of the item you are considering a warranty for.
Warranty Cost
Price of the extended warranty or protection plan.
Warranty Length
Number of years the warranty covers.
Estimated Failure Rate
Estimated chance the item fails or needs repair in any given year.
Avg Repair Cost (No Warranty)
Average cost of a repair if you do not have a warranty.

What each result means

Break-Even Failure Rate
Annual failure rate at which the warranty becomes worth it
Worth It?
1 = warranty is worth it, 0 = skip the warranty

How this is calculated

Worked example, using the default values

  1. Identify Input Parameters
    4 parameters
    Item Price = 800, Warranty Cost = 120, Warranty Length = 3, Estimated Failure Rate = 8 = 5 input(s) provided
  2. Calculate Expected Value of Warranty
    Expected Value of Warranty
    -42.54 = $-42.54
  3. Calculate Worth It?
    Worth It?
    0 = 0
  4. Calculate Expected Repair Cost
    Expected Repair Cost
    77.46 = $77.46
  5. Calculate Warranty Cost
    Warranty Cost
    120 = $120

Engine last updated .

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