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Fear-based Customer Services

Pay just £5 a month for Emergency Cover for your Boiler (or washing machine, drains, whatever).  We’ve all seen these.

To make this worthwhile, the sums are simple:

(Monthly fee) x (Months between repairs) > (Average repair cost)

Is this playing on peoples neuroses however? My last boiler repair equated to about 1.5yrs of monthly payments, except I hadn’t had a repair for 5years. Try calculating this for yourself and potentially save a few pennies.

It’s like an extended warranty and an insurance policy in one. The drip-drip small regular payments are easier to swallow than a budget-breaking (or savings-depleting) repair bill, and this is the real fear-factor here.  It also (oddly) feels like the right thing to do too, like a layer of extra protection, your own private army ready to defend you from random acts of failure.

After-all individual consumers cannot guess how often boilers (or whatever) need repair on average, so buy the service ‘just-in-case’. Interestingly the people selling this service can estimate this, as they’re fixing boilers all the time, and as such can make sure they’re going to not be coming to your house without you having already paid (and them some).

Interestingly many of these service providers don’t have anyone working for them except call-centre staff (and some of those work for many companies at once).  They just call local tradesmen to do the repair.  Isn’t this just you paying for the convenience of not picking up the Yellow Pages and making a few calls?

Perhaps as information sharing gathers pace and relevancy, being able to work out how often something fails and the costs associated might be easier. This would force companies to trim some of the fat from these service charges, and simply force them to become the regular payment scheme they suggest and we consumers want.

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