Generally the warranty company is not owned by the dealership. The dealer is merely acting as an agent for the company. Extended Warranties are sold both by dealers and third parties.
Price is based on the profit margin the warranty company experiences.
Warranties are highly profitable items to the seller because most don't cover the kinds of problems that commonly occur with used cars and many people who have warranties never use them, even when they can. What Extended Warranties cover varies considerably as the scope of coverage is different depending upon the level of protection purchased. Deluxe plans can cover just about every system on the vehicle and, in some cases, provide towing and use of a rental car while your vehicle is being repaired. There are many warranty companies offering different provision combinations. The better ones will cover more of the major component assemblies.