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Extended Warranty Plan Pricing Calculator

Reviewed for 2026, updated September 8, 2026.

Estimates the expected claim cost, break-even price and suggested selling price for an extended warranty or protection plan on a hardware product.

Your numbers

Results update as you type.

Your estimate

Expected claim cost per plan...
Break-even plan price...
Suggested plan price...
Suggested price as a share of product price...

Estimates only. Assumptions are listed below, and you can change every input.

Selling an extended warranty is attractive for a hardware brand, but pricing it by gut feel is risky in both directions. Price too low and a single bad batch turns your plan into a loss. Price too high and attach rates drop to nothing. The honest way to price a plan is to start from the cost you expect to carry and work forward to a price with a margin you can defend.

This calculator multiplies the coverage length by your annual claim rate to get expected claims per plan, then multiplies that by your average cost to repair or replace. Add your administration and selling cost per plan and you have a break-even price. The suggested price applies your target margin on top. It is an expected-value estimate, not an insurance rating model: it does not account for state regulation, reinsurance, or the tendency of customers who buy plans to file more claims.

How to use this tool

  1. Enter the product's retail price and how many years of coverage the plan adds beyond the standard warranty.
  2. Enter the claim rate you expect for each year of coverage and your average cost to repair or replace a unit.
  3. Add your per-plan administration cost and target margin, then compare the suggested price with what your customers will accept.

What the math assumes

  • Assumes the annual claim rate stays constant for every year of extended coverage; in practice failure rates often change as products age.
  • Assumes each claim costs the average you enter, with no cap on the number of claims per plan.
  • Assumes the target margin is expressed as a share of the selling price, not a markup on cost.
  • Ignores state and federal regulation of service contracts, reinsurance costs, taxes and refunds on canceled plans.
  • Does not model the tendency of customers who buy a plan to file more claims than customers who do not.

Frequently asked questions

What claim rate should I use for the extended period?

Use your own out-of-warranty repair requests as a guide: the share of customers who come back with a failure in years two and three tells you a lot. If you have no data, start conservatively and revisit the price once you have a year of plan claims.

Why is the suggested price higher than cost plus my margin percentage?

The margin is applied to the selling price, which is how most retailers think about it. A 30 percent margin on a plan that costs you 17.60 dollars means a price of about 25.14 dollars, since 30 percent of 25.14 is the profit.

Can I sell extended warranties directly as a hardware brand?

In the United States, service contracts are regulated at the state level and requirements vary. Talk to a lawyer or a service contract administrator before selling plans directly; this calculator only helps with the economics.

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