Differences from warranties
A service plan is a separate policy from the manufacturer'sMethods of service
Service plans vary in how an item is serviced. Some items may be serviced by the retailer's technicians, some may be sent out for repair, some may ship a replacement to the customer, some may be replaced by the retailer with a new item from the store inventory, or exchanged for store credit. Generally, if an item can be serviced in-store by the retailer, it will be. Some items like home theater equipment are repaired on-site with the retailer covering the cost. If the product can't be serviced by local technicians, then the items are sent to the manufacturer to be serviced. If the item is not serviceable or service is too expensive, the retailer will simply replace the product, or issue store credit for a newer model.Economics
Whether an extended service plan is worth the extra cost depends on the item and the perceived value by the consumer. Basic service plans on desktop computers, for example, typically come close to the actual average repair cost of a system, with the retailer using the service plan as a way to keep the customer from going to a competing service center. Support options can be beneficial to consumers who are unfamiliar with the use and maintenance of a computer. Replacement options may present an advantage over an RMA if the customer is disrupted enough by a product's absence (such as computer upgrades), but the low failure rate of the products and the ability to buy temporary substitutes usually offsets the price. Some items such as low-end headphones may consistently fail before the end of the coverage period, which can be advantageous.Presence among retailers
Service plans are seen mainly in office stores and electronics retailers, largely because of perceived fragility of electronics hardware and insecurity over the use of refurbished product. Some items such as computers and sale items produce very little profit for retailers, so selling service plans and accessories is essential to profiting from the transaction (seeSee also
* break/fix, the fee-for-service'' alternative to a service plan in commercial IT environments Contract law