Extended warranty

[Erwin P]

Just came across this post:


What do you guys think?
I'm not sure i will take it. It's a significant amount of money, but on the other hand it's 1/3rd of an MX battery or powertrain for 2 years extra.

For Stark i think it's quite smart.
- Revenue with minimal costs to them.
- Showing trust in your product.

For me as a owner who is thinking about selling (to get an EX) maybe that little extra confidence a buyer might want.

 

[Theo]

Happy to see this possibility!

IMO, the fact that it's convenient or not is partially objective and partially subjective:

Subjectively:
- Is the owner going to keep that Varg? If not, will it be sold before or after the original warranty expires?
- Are there any modifications or damages that could void the warranty?
- What would the owner do with that money otherwise? If invested, 1,000 $ can become 1,200 in two years, for example.
- How does the financial situation of the owner look like?
- Will the owner feel annoied more by not having extended and paying an expensive repair or vice versa?

Objectively:
-In general, using a high school approach, if the warranty extension costs an amount that we call WE (for example, WE=599$ for one year), then, without knowing anything else, the extension is convenient for the owner if the overall cost of the repairs, each multiplied by their probabilities, exceeds, WE.
For example:
conditions:
- WE = 999 $ for 2 years
- for semplicity, let's pretend that the battery and the motor are the only parts thats can fail in those two years and that they can only be replaced and not repaired.
- a battery replacement costs 3,000 $
- the probability that the battery will fail in those two years is estimated to be 1/6 (just because it's an easy number to compute here)
- a motor replacement costs 3,500 $
- the probability that the motor will fail in those two years is estimated to be 1/14 (just because it's an easy number to compute here)
execution: (3,000 $ • 1/6) + (3,500 $ • 1/14) = 500 $ + 250 $ = 750 $
750 $ < 999 $, so this should discourage the user from extending the warranty
- We still need to see whether Stark Future will repair or replace batteries and motors after warranty and for how much money.
- We still need to see how they will behave in case it's not clear which component needs replacement; I guess they could tell you to go to a dealer who will try to swap parts, but probably you would pay the labour.
-Funding Stark Future will help it and I think that everybody here wants them to succeed.

 

[Erwin P]

Yeah i think they figured the calculus will fall into their favour. So that will be in that €750 vs €999 range and will help them.
It also does buy some piece of mind.

I would expect them to keep the same level of tech support, except that all parts (and dealership work) are paid for. I would expect to see prices in the range of what you see on their webshop.

I think this a good way for Stark to create revenue. Their bikes are a bit ''too good'' compared to ICE's. Even an ICE that extends it maintenance work 2x needs way more parts (let alone labour) than a Stark. My 2 stroke ''needed'' an engine rebuild at least every year (before the Stark took most hours). That was €1500 - €1800 and i did the work myself (exluiding the new big-end pressing and nicasealing of cylinder). When i have to work done by the the dealer that will exceed €3000. But in raw parts that's allready some serious revenue for the OEM.
Stark doesn't have that so they need the cash flow from somewhere else. Hence the subscription and extended warranty.
If it was up to me i would offer a combined one as Stark. Who knows what happens in 2 years in bike ownership, but it is very tempting to have it in warranty as long as you own it. Let's say €49 a month for all the premium features AND warranty might be what pulls some owners over into investing that after 2 years.

For me it's also a piece of mind that i have warranty. If it was 100% on me i wouldn't have gone into as deep water as i have. Now they claim a 2m deep water resistant so as long as i believe it is shallower than i'm tall i just go for it.