Quote:
Originally Posted by Blake Foster
just so i understand the machine was say 250,000.00 and then you charged the customer lets say another 50,000.00 for warranty and goodwill? what if there was no warranty or goodwill needed? did the customer get his 50,000 premium back? or was that just extra profit at the end of the day?
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Warranty reserves are normally based on historical warranty costs. At least that is my experience. It is normally taken as a percentage of product cost. If you are delivering quality products should not be more than a few percent. Your example is quite extreme...
Don