If you're going to have to pay for repairs you when they happen it's not quite as obvious. I'm in the warranty business and our margin on paid service calls is pretty close to our margin on the warranties. The big difference is that our cancelation/declined estimate rate is much higher on paid calls, so in effect the benefit of the warranty to us is that we're guaranteeing the business, not so much that we're making a whole lot more money than if you just came to us when it broke and we fixed it. It all comes down to how risk averse you are. Some people really like the peace of mind that comes with “hedging.”

I’m not in the auto industry so I don’t know if that’s a good price.