How to offer a warranty in your small business

What happens if your customer isn’t completely satisfied with your product or service? What will you do to make it right with them? A full refund, partial refund, store credit, no refund? These product and service warranties are a competitive tool – warranties show that a company is willing to stand behind what they sell.

What kind of warranty will you offer in your small business?

The length of the warranty you offer depends on the industry you’re in and what the product is. The aspects of service you want to cover will depend on the situation. Sometimes, products will come with their warranties from the manufacturer. Warranties on services cover satisfaction with the work completed.

The product or service scope should be considered. Will your warranty cover all products or just certain ones? Will your warranty terms differ across products or services?

Think also of the market scope – should the same warranty be offered in all markets, or just some? This decision will rest on local laws.

Another aspect to consider about small business warranty is what the customer must do or not do to keep the warranty valid. Who will honour the warranty – the manufacturer, wholesaler, retailer, or dealer? Customers don’t like to mail products back to the manufacturer, so who should be responsible for responding to a warranty claim?

Warranty claims involve a cost to the small business, but the potential cost to your business of providing no warranty at all can be very significant. A new small business may find it hard to estimate the problems that could come up as its product or service enters the marketplace. We believe warranties are an important aspect of a small business, but you can take steps to minimize their necessity. Careful field-testing of a new product or service will help to take care of product reliability or liability issues once your product or service sees the light of day.


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