What are your stories on doing warranties and maintenance? - Page 1
Forum section: electronics / general

author: sandalcandal
author_rank: Unknown
timestamp: September 17, 2020, 07:00:46 am
content: 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 investmentProviders need to:a. Make sure the equipment they're selling isn't a lemon and can actually provide return on investmentb. Not overstretch selling a warranty they can't back upIf you screw up your warranty then:a. Its too low and nobody is going to be confident buying your equipmentb. Its too high and you'll screw yourself with costs of supporting something unreasonableSo 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 intendedreliablyfor 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 happensSetup a variable warranty plan with the option to extend warranty with the purchase of an annual maintenance agreementDon'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.

author: sandalcandal
author_rank: Unknown
timestamp: September 24, 2020, 12:58:07 pm
content: Giving this post a bump and some more info. Currently looking at some warranty and support service terms like ABB (https://sol-distribution.com.au/ABB/abb-warranty-document.pdf) which has some options on support service levels and LG's powerwall warranty (http://solarjuice.com.au/wp-content/uploads/2018/01/lg-chem-lv-resu-limited-warranty.pdf) where the the warranty refunds/replacements "depreciate" after the initial 24 month warranty.Any comments?

author: ajb
author_rank: Super Contributor
timestamp: September 24, 2020, 10:41:47 pm
content: A few random thoughts in no particular order.- Make sure that you clearly outline the conditions under which your product is intended to be used, and the conditions of use that will invalidate the warranty. You need all of this in writing so you can point to it when someone demands warranty service for some ridiculous misuse.- Warranty support is a cost of business. It needs to be factored into your business plan and product pricing.- Support time is also a cost of business, whether it's part of the warranty service or not. Make sure to budget for time spent on phone/email support- Part of the terms of your warranty should include a reasonable amount of remote troubleshooting before issuing an RMA. You don't want to end up shipping a bunch of perfectly good product back and forth because someone didn't RTFM.- Be clear in your warranty terms about who pays for what type of shipping when, and whether or not you will provide loaner equipment or advance replacement.- Be careful about the warranty you offer on replacement parts or items. Beware of infinite warranty traps.- Since you're dealing with a new product (and a new business?) you're in a tough spot in terms of figuring out the optimal parameters, as you've noticed. Remember you can always extend your warranty later, but it's very hard to shorten it, so be very carful as you start out.- Be sure to include a term in your warranty that protects you from any claims of loss beyond the replacement cost of your product. For example, you don't want someone to be able to sue you for loss of income because a product of yours that they relied on failed.- This is a big one: Make sure your company is structured to limit liability in case of things going very badly. This could be due to issues with warranty support, or basically anything else. Consult a lawyer for the best way to incorporate the company so that your personal assets can't be pursued if the business fails. Depending on the nature of the business, you may even want to incorporate multiple entities, so that some assets (like IP) can be held safe from liquidation in case of catastrophe.

author: sandalcandal
author_rank: Unknown
timestamp: September 25, 2020, 01:47:42 pm
content: Thanks ajb. Sounds like some solid advice, lots of little things that could easily be overlooked and endup screwing things up.On that advice to setup liability limitation structures, we're already set up as an Australian Pty. Ltd. and setting up a holdings company is another thing we've been advised to do previously and are in the process of getting done with some corporate lawyers.Ultimately we're gonna be paying some lawyers to help us draft the warranty agreement but its good hearing some general wisdom and knowing what to expect.

author: mag_therm
author_rank: Frequent Contributor
timestamp: September 26, 2020, 02:03:22 am
content: In my experience ( power electronics) , vendor will have standard warranty terms as condition of purchase.But for industrial equipment, particularly high value, mission critical, and turn key projects,the purchaser's tender document will usually stipulate that purchaser's warranty requirements will prevail in the contract.Warranty expiry , typically 24 months after commissioning.Often, purchasers' warranty requirements are fairly standard across their industry and reasonable.There are ISO standards for warranty, but I rarely saw them in international contracts.I have seen cases where purchaser goes over-the-top, one example: trying to demand that the supplierwill provide warranty and insurance against consequential losses in perpetuity!

author: vk6zgo
author_rank: Super Contributor
timestamp: September 26, 2020, 02:52:44 am
content: One place you can trip up is if you don't allow for the purchaser's expertise in either this, or similar fields.Stuff you may be able to lean on in the consumer field won't fly with big engineering companies.They will probably want to be able to "open the thing up" to inspect it or to apply particular mods, (like moving input/output connectors from the rear to the front, or vice versa, changing said connectors to their standard type, even plumbing fire protection into it, if it is very large.)They will also want to be able to do "first in maintenance" to the device if it arrives "dead on arrival".They want to have the thing working & earning money for them, not being shipped back across the country or the world for some easily fixed problem.When I worked for Telecom Australia, & later, for the Channel Seven Network, we never got a warranty knock back, & we did many of the things referred to above.And, for Pete's sake, don't have your on call people mis-matched to the statistically most likely fault conditions.One company I worked for had IT guys "on call" , but most faults were electronic or mechanical.The Software was extremely reliable.