Pricing / Warranty / Future Problems

We won the order. The warranty can figure itself out.

At CDR, we keep the purchase price low by leaving some expensive details for after the customer has already purchased.
CDR Insights Approx. 4 min read Warranty funding: future problem

Customers love low prices. We love winning tenders. Conveniently, those two interests work beautifully together right up until something breaks.

Our competitors make the mistake of putting all sorts of boring future costs into today’s price: warranty reserves, spare parts, service engineers, diagnostics, travel, software support and enough margin to still care about the customer three years later.

We prefer not to make today’s quotation suffer for tomorrow’s problems.

The machine is cheap. The warranty is written down. The service email exists.

Financial planning can happen when somebody actually needs service.

WE PUT EVERYTHING INTO THE PRICE.
EXCEPT THE FUTURE. After-sales support remains fully included in the brochure.
01 / PRICE

Why are we so cheap? Because winning feels better than margin.

Everybody in the market buys electronics, steel, cables, components and labour. Somehow our quotation still manages to arrive suspiciously near the bottom.

Maybe we are simply more efficient.

Or maybe some competitors have this strange habit of charging enough money to support the equipment after they sell it.

We see margin differently. Margin creates distance between us and the lowest bid. Warranty reserves make the quotation ugly. Spare-parts stock is money sitting on a shelf doing absolutely nothing.

So we trim.

MATERIALS
Included. Unfortunately necessary.
LABOUR
Included. Employees remain traditional.
WARRANTY
Included as a promise.
AFTER-SALES
Included as an email address.
Competitors call it margin.

We call it money that could have made us cheaper.
02 / WARRANTY

Our warranty is fully funded by optimism

A warranty sounds cheap until somebody uses it.

Then suddenly we need an engineer. A replacement board. International shipping. Diagnostics. Maybe flights and hotels. Maybe several days of technical work for a customer whose invoice was paid two years ago.

Proper manufacturers expect this and keep money available for it. We expect the equipment not to fail.

This produces excellent financial results right up until the equipment develops an opinion.

WARRANTY: 24 MONTHS.
RESERVE: POSITIVE THINKING.

And if a claim arrives at an inconvenient moment, our technical diagnosis becomes extremely motivated to discover installation error, misuse, environmental conditions or anything else that comes with somebody else’s invoice.

Warranty investigation begins with:

“How sure are we this is our fault?”
03 / SPARE PARTS

Our spare-parts warehouse is located at our suppliers

Customers occasionally expect us to keep important spare parts available. Control boards. Modules. Contactors. Displays. Components that can put an expensive machine back into operation quickly.

Unfortunately, stocking parts requires money.

A spare board sitting unused on our shelf is terrible for cash flow. The same board sitting on somebody else’s shelf is called supplier inventory.

So when something breaks, we place an order too.

This creates a wonderfully equal experience: the customer waits for us, and we wait for our supplier.

SPARE PARTS AVAILABLE
IMMEDIATELY AFTER LEAD TIME.
04 / SUPPORT

24/7 means you can contact us at any time

Customers sometimes misunderstand what 24/7 support means.

It means you can send the email twenty-four hours a day, seven days a week.

Resolution is a separate product category.

We can acknowledge the ticket, ask for photographs, request logs, schedule another call and copy increasingly senior people into the email. None of this requires us to maintain a large dedicated support organisation.

If the problem actually requires an engineer on-site, then the economics become more interesting. Flights cost money. Hotels cost money. Engineers apparently expect salaries while travelling.

So every field-service visit becomes a small internal referendum on how badly we want to honour the warranty.

RESPONSE
Fast.
DIAGNOSIS
After clarification.
SPARE PART
Procurement informed.
ON-SITE
Finance informed.
Fast replies.
Variable resolution.
05 / FUTURE CUSTOMERS

Fortunately, we can always sell another machine

The beautiful thing about underfunding future obligations is that the future eventually arrives with new customers.

A warranty claim from an old project requires money today. A new order also brings money today. We enjoy these coincidences.

Suddenly we can buy the missing part, send something urgently or free up engineering time to fix equipment whose original margin disappeared long ago.

Of course the new machine now has its own future warranty obligation.

That is tomorrow’s problem.

01
SELL
Win through low price.
02
DELIVER
Warranty clock starts.
03
BREAK
Customer discovers after-sales.
04
FUND
Sales finds somebody new.
TODAY’S SALE.
YESTERDAY’S WARRANTY.
TOMORROW’S PROBLEM.

Frequently
Unsupported Questions

Why are we cheaper than everybody else?

Efficiency.

Also some things our competitors include in the price have been moved into the category later.

Do we provide 24/7 support?

Absolutely.

Our inbox has no opening hours.

What happens if something expensive fails under warranty?

First we investigate. Then we clarify. Then we examine the installation. Then we review the warranty conditions.

Somewhere during this process Finance becomes emotionally involved.

We could raise our prices slightly and actually fund the things we promise: warranty work, service engineers, spare-parts inventory and enough technical capacity to support customers years after delivery.

But then our quotation would be less impressive.

And the tender is decided today.

The failure happens later.

We know which date Sales cares about.

WE ARE THE LOWEST PRICE
BECAUSE SOME OF THE PRODUCT
IS STILL IN THE FUTURE.
CDR AFTER-SALES

Lowest price today.
Tomorrow sold separately.

WARRANTY — FINANCIALLY SUBJECT TO AVAILABILITY
Support remains included in principle.
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