Replacement vs Repair
Decision framework for choosing between repairing or replacing warranty items.
Deciding whether to repair or replace a defective product involves balancing cost, customer satisfaction, and operational efficiency. This guide provides a framework for making these decisions.
Decision Factors
Key Considerations
| Factor | Repair Favoured | Replace Favoured |
|---|---|---|
| Repair Cost | < 50% of replacement | > 50% of replacement |
| Time | Quick repair possible | Lengthy repair time |
| Part Availability | Parts in stock | Parts discontinued |
| Product Age | Recent purchase | Near end of life |
| Failure History | First issue | Repeat problems |
| Customer Preference | Wants original item | Wants new unit |
Cost Analysis
Repair Cost Threshold
Set a repair cost threshold:
If Repair Cost > X% of Replacement Value → Replace
If Repair Cost ≤ X% of Replacement Value → Consider Repair
Common thresholds:
- Conservative: 30%
- Standard: 50%
- Cost-focused: 70%
Total Cost of Repair
Include all costs:
- Parts
- Labour
- Shipping (both ways)
- Overhead
- Risk of repair failure
Hidden Costs
Consider less obvious costs:
- Customer wait time (satisfaction impact)
- Repeat repairs if issue recurs
- Administrative overhead
- Warranty on repair
Product Value: $200 Repair Estimate: $80 (40%) Replacement Cost: $200
At 40%, repair is cost-effective. But if repair takes 2 weeks vs. immediate replacement, customer satisfaction may favour replacement.
Decision Tree
Is Repair Possible?
If the item cannot be repaired (destroyed, parts unavailable), replacement is the only option.
Cost Comparison
If repair cost exceeds threshold (e.g., 50%), lean toward replacement.
Time Factor
If repair takes significantly longer than replacement, consider customer impact.
Repeat Issues
If item has had previous repairs, replacement may prevent future claims.
Customer Preference
If customer strongly prefers one option, factor this into the decision.
Configuration in ReturnMate
Auto-Resolution Rules
Configure automatic decisions:
- Go to Settings → Warranty → Resolution Rules
- Set cost thresholds
- Configure product-specific rules
- Enable/disable auto-decision
Example Rules:
- Items under $50 → Auto-replace
- Repair cost > 60% → Replace
- Third warranty claim → Replace with new model
Manual Override
Staff can override automatic decisions:
- Open the case
- Click Change Resolution
- Select new resolution
- Enter reason for override
- Confirm
Product-Specific Policies
Simple Products
For low-complexity items:
- Usually more economical to replace
- Faster resolution
- Less risk of repeat issues
Complex Products
For technical items:
- Repair may preserve customer data/settings
- Replacement may require reconfiguration
- Consider refurbished units as middle ground
High-Value Products
For expensive items:
- Repair threshold may be higher
- Consider customer relationship value
- Offer options when possible
Inventory Considerations
Replacement Stock
Maintain replacement inventory:
- Refurbished units for replacements
- Buffer stock for common issues
- New units for high-priority cases
Refurbished vs New
| Refurbished | New |
|---|---|
| Lower cost | Higher customer satisfaction |
| Good for like-for-like | Required for defective new items |
| Sustainable option | Warranty restart expected |
Stock Availability
Factor inventory into decisions:
- If replacement unavailable, repair may be only option
- Long backorders favour repair if faster
- Discontinued products may require alternatives
Customer Communication
Explaining the Decision
When Repairing:
Hi [Customer],
We've assessed your [Product] and determined we can repair it.
The [component] will be replaced, and your item will be returned
in full working order.
Expected turnaround: [X] business days
When Replacing:
Hi [Customer],
Rather than repair your [Product], we're sending you a replacement.
This ensures you receive a fully-tested unit with a fresh warranty period.
Your replacement will ship within [X] business days.
Offering Choice
When appropriate, give customers options:
Hi [Customer],
For your [Product], we have two options:
Option A: Repair
- Turnaround: 7-10 days
- Same unit returned, repaired
Option B: Replacement
- Ships in 1-2 days
- Refurbished unit, fully tested
Please let us know your preference.
Tracking & Analytics
Resolution Metrics
Track decision patterns:
| Metric | Purpose |
|---|---|
| Repair vs Replace Ratio | Cost trend analysis |
| Average Repair Cost | Efficiency tracking |
| Repeat Failure Rate | Quality insight |
| Customer Satisfaction by Type | Preference learning |
Cost Reports
Analyse warranty costs:
- Total repair costs
- Total replacement costs
- Average cost per case
- Cost by product category
Best Practices
- Set clear cost thresholds
- Consider total cost, not just repair cost
- Factor in customer experience
- Track repeat failures by serial number
- Maintain adequate replacement stock
- Review decision data regularly