May 30 2023

Why Small Businesses Should Consider Protection Plans

Protection plans are a worthwhile investment for SMBs. Here’s why.

Small businesses are projected to spend more than $1.45 trillion on IT in 2023, and a big chunk of that money is being spent on endpoint devices such as desktops, laptops and tablets. While the lifecycles of these technologies have steadily increased over the past few decades, unexpected failures or damage can be costly and time-consuming, especially if devices or hardware are outside the original equipment manufacturer (OEM) warranty period.

To maximize the value of IT investment, SMBs may want to consider purchasing protection plans, especially for devices that are critical in day-to-day operations. Here’s a look at how protection plans work, how they can benefit SMBs and how companies can balance warranty work with technology replacement. 

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The Value of Protection Plans for Small Businesses

Protection plans offer coverage for devices or hardware beyond the warranty provided by manufacturers. These plans became popular with the boom in personal electronics as a way to instill consumer confidence.

Consider a laptop that experiences a sudden critical component failure. If the device is outside its OEM period, SMBs face a tough choice: Spend a significant amount upfront to replace the device entirely or spend less to repair it with the knowledge that it could fail again.

Protection plans provide additional coverage for issues such as unexpected damage, mechanical or electrical failures, power surges, and more. They also can cover items such as batteries, dedicated screens or peripherals for an additional cost. While term lengths vary, most plans cover for two to five years, while OEM plans are often for one to three years at best.

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What are the Benefits of Opting in for SMBs?

When it comes to protection plans, customers may worry that additional coverage will come with promises of repair but no follow-through. But with the right partner and the right plan — such as CDW’s Product Protection Plans, backed by an A-rated carrier and administered by Safeware — SMBs gain several benefits.

  • Reduced Financial Risk. Sudden hardware replacements are costly for SMBs. With protection plans, however, small businesses can rest easier knowing that their devices will be fixed or replaced, helping them get back to work ASAP.
  • Maximized Device Lifespan. Every electronic device has an average lifespan. For mobile devices, two to three years is common. But these averages aren’t guarantees. Unexpected electronic or mechanical failures can result in premature device failures, not to mention accidental damage. With protection plans, businesses can get the most from devices over time.
  • Improved Cost Control. Protection plans also can help businesses better estimate and control costs. Plans such as CDW’s Product Protection Plan include established relationships, negotiated rates and two-way domestic shipping. Rather than setting aside money for potential failures, companies can purchase plans upfront and better control total costs.

With protection plans, SMBs don’t need to safeguard proof of purchase, which may be required to obtain service. Instead, all data is stored electronically. As long as businesses have the devices they purchased initially, serial numbers are enough to request service.

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How to Make the Most of Protection Plans

To make the most of protection plans, SMBs benefit from both short- and long-term strategies. In the short term, this means selecting the plan type that best suits their needs. For example, standard CDW Product Protection Plans include coverage for mechanical or electrical failure. Standard+ includes accidental damage protection, and Premium removes the limit on the number of covered repairs for the life of the plan.

In the long term, businesses must find a balance between repair and replacement. Consider mobile devices: While it may be possible to purchase a five-year protection plan, changes in mobile tech over that time may render the device almost useless then. As a result, it may be more cost-effective to purchase a two-year protection plan and then replace the device when the term is over.

For SMBs, protection plans offer the peace of mind that comes with reduced risk, maximized lifespan and improved cost control.

This article is part of BizTech's AgilITy blog series. Please join the discussion on Twitter.

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