Warranty vs. COD: Why I Still Believe in Warranty Work

Warranty work helped keep my appliance repair business alive. That's why I don't agree with dismissing all warranty companies as a bad idea. I built my COD business through Google and word of mouth, too. Both have played a valuable part in my business, and I believe both deserve a fair look.

Some warranty companies are good to work with. Some are not so good. You have to learn the difference.

A good warranty relationship can bring valuable work to a repair business. Understanding the rates, authorization process, paperwork and payment terms helps you choose the companies that fit your operation. Based on my own experience, warranty work can be a great part of the business.

The decision comes down to which companies you work with, what the work requires and whether it makes sense for your operation.

What warranty work did for my business

When you're building a repair business, you need calls. You can have the skills and the tools, but you still need work coming through the door.

One home warranty company was a godsend for my business. They sent consistent work orders every week, and there was a payment routine I could plan around.

When I submitted my diagnoses and paperwork by Wednesday, they processed them on Thursday, and I got paid on Friday. As long as I kept my paperwork in order and met the deadline, that weekly payment cycle worked well for me.

That wasn't just work on a schedule. It was completed work turning into money I could use to keep the business operating.

Another company I worked with offered a payment process that could be even faster. On jobs I completed on the first visit, I could receive a virtual payment card number and collect payment that same day.

Those were my experiences with those accounts at that time. An owner still needs to confirm the current payment terms offered to their own business.

That experience is why I speak positively about warranty work. It gave me work to build on while I developed the direct customer side of my business.

If you dismiss the whole category before looking at individual companies, you may pass up a relationship that could work well for you.

What losing a good account taught me

I had COD customers while I was doing that warranty work. But the warranty account supplied enough work that I didn't have to put as much attention into building the COD side.

I came to depend on it. When that relationship ended, it hurt.

That experience didn't make me decide warranty work was bad. It showed me why I needed to keep developing the rest of the business while a good account was still sending work.

A productive warranty relationship can be valuable. I wouldn't let it become my whole plan for where the next customer comes from.

When payment becomes the problem

My experience with another warranty company was very different. We completed multiple work orders, paid for parts, and then spent a long time chasing payment. We pursued some of that money for more than a year.

That's a hard position for a repair business. The work is done, the parts money is already out of your pocket, and you're spending more time trying to collect what you're owed.

It changed how I was willing to handle repairs for that account. The customer-paid service fee at the visit meant I received payment for that part of the work. But it didn't solve the problem of collecting the repair balance from the warranty company.

My position became: if the company wanted me to complete the repair, it needed to supply the parts. I wasn't willing to keep buying parts myself for an account with that payment history.

That was a decision about my experience with that particular account. It isn't a reason to write off the companies that treated me well. It is a reason to pay attention to payment performance before taking on more work or spending more of your own money.

Choose the right warranty relationships

Some warranty companies are better to work with than others. Finding the right ones is worth the effort.

Before taking on an account, my first and most important question is: How and when do they pay?

I want to know how I'll receive payment, when I can expect it and what starts the payment clock. Is it the completed job, the submitted claim or the approved paperwork? A payment schedule I understand and can plan around is one of the things that made my good warranty accounts so valuable.

Here's what I'd want clear answers to:

• How and when do they pay? What is the payment method, when can I submit for payment and when is that payment due?
• What does the agreed rate cover: diagnosis, the completed repair, return visits or some combination?
• Who collects the service fee, and how is it accounted for against the rest of the job?
• How do you request additional labor or other expenses?
• Who supplies the parts, and what documentation is required?
• What happens when you need authorization before proceeding?
• What are your obligations if the appliance needs another visit?
• Does the service area fit the routes you can reasonably cover?

Then compare those answers with what actually happens as you complete jobs. Clear terms matter, and so does the day-to-day experience of getting work approved, completed and paid.

As one concrete example, ServicePower's published servicer terms describe authorization, recordkeeping and claim-submission requirements. They also state that an agreement does not guarantee calls or income. Those are examples of why reviewing the specific agreement matters; they aren't universal terms for every warranty account.^[1]

Understand what makes each account worthwhile

I believe in the value of warranty work. I also believe you have to pay attention to what each account costs you to service.

Look beyond the time spent repairing the appliance. Include the drive, the diagnosis, the parts process, the return visit and the office time needed to finish the claim. Track what you receive for the job and how long it takes to collect it.

A useful habit is to review completed jobs by account. Ask yourself: Would I willingly take more work like this, under these same terms?

That gives you a better basis for deciding which relationships to keep, which terms to discuss and which accounts don't fit your business.

COD work is great—and you have to build it

COD work is awesome. By COD, I mean customer-paid repair work: the customer hires your company and pays you directly under your agreed payment terms.

You get to establish your pricing, build a direct relationship with the customer and grow a business people recognize and recommend. That's a valuable part of owning a repair company.

I built my COD business through Google and word of mouth. Those were the foundations of that side of my business.

The point I want to make is that you have to build it. The calls don't simply appear because you're a good technician or because you've decided to go into business. People need to find you, choose you and have a reason to recommend you to someone else. A website and online booking can help customers find and contact you, alongside advertising and the reputation you build from completed jobs.

With Google Ads, I wouldn't treat opening an account and turning on a campaign as the whole job. Campaigns need attention and optimization. Google has brought me consistent leads, but my results shouldn't be read as a promise that another shop will get the same results after a month.

Google's guidance describes Smart Bidding as an ongoing learning process. Conversion data, campaign changes, seasonality and competition can affect performance. There isn't one fixed optimization timetable that applies to every repair business.^[2]

And getting an inquiry is only part of getting a job. You still have to answer the phone, talk to the customer, capture their information and follow through. That's the owner's part of the process.

That takes time and attention. For an owner building a direct customer base, warranty work can be a useful part of the mix along the way. In my case, warranty calls helped keep the business going while I built the COD side.

I see value in both: good warranty relationships can bring work into the business, and a growing COD customer base gives you something to keep building on.

Find the mix that fits your business

I don't think every shop needs the same balance of warranty and COD work. Your service area, available capacity and individual accounts will affect that decision.

If warranty work is helping you keep a productive schedule, give it credit for that. Keep strengthening the relationships that work well, and continue building your direct customer base. Review each account on its own merits so your mix supports the business you want to grow.

You can value warranty work and still be selective about the companies you work with.

Warranty companies helped keep my business going. Google and word of mouth helped me build my COD business. I value both. Find the warranty companies that work well for you, give customers service they're happy to recommend and keep building from there.

Servana Insights is an editorial resource from the founder of ServanaHQ, sharing practical perspectives on running an appliance repair business.

Sources

[1] ServicePower — published servicer terms and conditions. Referenced for examples of account requirements and the absence of guaranteed call volume. Review the agreement offered to your business for its applicable terms.

[2] Google Ads Help — How our bidding algorithms learn. Referenced for continuing optimization and the factors that can affect campaign performance. This is separate from Mike's account of his own results.