Pros and cons of offering a warranty
From time to time, and as part of your bid submission, or response to a request for proposal or request for quotation, it may be necessary to include a warranty for the goods and services to be delivered. Without a doubt, offering a warranty can improve the attractiveness of your offer considerably, but the decision to offer it ought to be carefully considered. Here we outline a few pros and cons.
Pro #1. Offers some assurance to Clients
A key benefit of offering a warranty (or guarantee) is that it can lower prospective Clients’ hesitation to procure goods or services from you. Essentially, you are providing some assurance that in the event the goods or services are faulty, or not performing as expected – but excluding certain circumstances that you should specify – the Client will not be left in the lurch, and you will remedy the problem.
Pro #2. Differentiates your submission from the competition
Second, when, as part of your solicitation response, you offer a warranty, or guarantee for goods or services that you can provide, it can be a means of differentiating your submission from those of other bidders. In some instances, the Client requests all bidders to include details on the warranty or guarantee they intend to offer. However, in the instances where it is not stipulated, inclusion of such terms can offer you a distinct competitive advantage, and increase the overall attractiveness of your submission.
Pro #3. Can be considered a declaration of confidence
Finally, in offering a warranty (or guarantee), it means you are prepared to absorb the cost and effort to remedy problems Clients experience. Such a posture can be seen as a declaration of your confidence in the quality of the products and/or service you deliver, which can also help in assuring the Client of your superior offerings, thus differentiating your submission from other competing responses.
Con #1. Attracts miserable Clients
On the flipside, offering a warranty or guarantee can be a licence to Clients to expect that you will be at their beck and call. Although most Clients are honest, there are a few who will try find ways and means of exploiting this benefit, which ultimately costs you, the Consultant or Vendor, in both time and money
Con #2. Impossible to meet all expectations
Another disadvantage of offering a warranty or guarantee is the fact that very rarely will you be able to provide a solution that is absolutely perfect, and meet all of the Client’s expectations. The situation is further compounded if the challenges the Client is experiencing is outside the terms under which the warranty would be honoured, which in turn, can strain your relationship with the Client, and loss of future business.
Con #3. The administrative headache of a longstanding commitment
Finally, in offering a warranty or guarantee, it means that you (or your organisation) are prepared to honour that commitment, which may be effective for several weeks, months, or even years. It as means that adequate administrative and client management provisions would need to be made to, among other things, keep track of Clients, and the products and the services provided, should – sometime in the future – a matter need to be revisited.
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