When customers return a product to you that is still under warranty, a credit is applied to the order for the warranty item. The credit is prorated based on (1) the warranty schedule selected for the product, (2) the warranty type associated with the customer's price level, and (3) the number of months that have passed since the original purchase date. If no warranty schedule is selected, a full credit is applied to the order using the current price of the product.
To understand how the system calculates prorated credits based on warranty schedules, review the following sample schedules and examples.
In this sample scenario, the warranty schedule has a measurement of months. The warranty schedule is set up as follows:
|
Length of warranty period |
Cost per period |
Adjusted % |
|
3 (months) |
0.00 |
— |
|
36 |
1.43 |
— |
To calculate the credit that the customer would receive when returning a product that uses this schedule, the system first determines which cost per period in the above schedule is applicable. For example, if a product is returned between 3 and 36 months after purchase, the cost is calculated using $1.43 as the cost per month. The system uses the following equation to calculate the customer's credit:
Customer credit for returning warranty item = Current price — (No. of months since original purchase date X Cost per period)
In each of the following examples, a customer returns a product that has the above warranty schedule assigned to it. In each case, the current price of the product at return time is $100.00.
Example 1: A customer returns the product 2 months after purchasing it. This length of time is less than or equal to the length of warranty period set up in the first row in the schedule (Length = 3 months, Cost = 0.00). In this example:
Customer credit for returning warranty item = 100 — (2 X 0.00) = $100.00
Example 2: A customer returns the product 32 months after purchasing it. This length of time is greater than the first but less than or equal to the last length of warranty period (Length = 36 months, Cost = $1.43). In this example:
Customer credit for returning warranty item = 100 — (32 X 1.43) = 100 — 45.76 = $54.24
Example 3: A customer returns the product 40 months after purchasing it. This length of time is greater than the last length of warranty period. No warranty coverage is available, and no credit is given to the customer.
In this sample scenario, the warranty schedule has a measurement of months. The warranty schedule is set up as follows:
|
Length of warranty period |
Cost per period |
Adjusted % |
|
3 (months) |
— |
0.00 |
|
6 |
— |
15.00 |
|
12 |
— |
30.00 |
|
24 |
— |
60.00 |
|
36 |
— |
90.00 |
|
40 |
— |
98.00 |
To calculate the credit that the customer would receive when returning a product that uses this schedule, the system first determines which adjusted percentage in the above schedule is applicable. For example, if a product is returned between 3 and 6 months after purchase, the cost is calculated using 15.00% as the adjusted percentage. The system uses the following equation to calculate the customer's credit:
Customer credit for returning warranty item = Current price — (No. of months since original purchase date X Adjusted Percentage)
In each of the following examples, a customer returns a product that has the above warranty schedule assigned to it. In each case, the current price of the product at return time is $39.95.
Example 1: A customer returns the product 2 months after purchasing it. This length of time is less than or equal to the length of warranty period set up in the first row in the schedule (Length = 3 months, Adjusted % = 0.00). In this example:
Customer credit for returning warranty item = 39.95 — (39.95 X 0.00%) = $0.00
Example 2: A customer returns the product 22 months after purchasing it. This length of time is greater than the 12 month length but less than or equal to the 24 month length of warranty period (Length = 24 months, Adjusted % = 60.00). In this example:
Customer credit for returning warranty item = 39.95 — (39.95 X 60.00%) = 39.95 — 23.97 = $15.98
Example 3: A customer returns the product 42 months after purchasing it. This length of time is greater than the last length of warranty period. No warranty coverage is available.