Extended Warranty True Cost
Extended Warranty Calculator — Expected Value
What this calculator does
This calculator compares the cost of an extended warranty to the expected value of repairs. Most extended warranties are not worth the price.
The math, with a worked example
Expected claim value = claim probability × average claim cost. Expected value = expected claim value − warranty price. Break-even = warranty price ÷ claim probability. A $250 warranty with a 15% claim chance and a $300 average repair has an expected value of about −$205. The break-even repair cost is $1,667.
Why this matters
Extended warranties are priced so the store wins on average: a $250 warranty against a 15% chance of a $300 repair has an expected value of about −$205. You're not buying protection, you're buying certainty at a 5-to-1 markup over its statistical worth.
Methodology and transparency
Expected value = claim probability × average claim cost − warranty price; break-even = the claim rate at which the warranty would merely tie. Both inputs are estimates — failure rates by product category and your own repair cost — and the model prices only money, not peace of mind or a manufacturer's-defect window your credit card may already extend for free. Check your card's benefits before paying for overlap. Everything runs in your browser; no data is sent or stored.
Last reviewed: 2026-08-08
Common questions
Are extended warranties ever worth it?
Rarely. They are profitable for sellers because expected claims are usually far below the price.
What is expected value?
It is the average outcome over many identical warranties. A negative expected value means you lose money on average.
When might a warranty make sense?
If a single repair would cause a financial emergency and you cannot self-insure, a warranty can be peace of mind.