Few things cause as much anger as when an appliance that you needed to use breaks down. Beyond the immediate inconvenience, now you have to consider whether it is worth repairing it or buying a new one. To help you make that decision, here are some tips.
The first thing you have to do is check if it is under warranty or maintenance contract with the manufacturer or distributor and if its failure is not for any reason outside the warranty or contract. Some of the reasons warranties do not apply are electric shocks, humidity, misuse, blows, or damage when moving it.
The next thing to consider is whether you can go to an appliance parts store and repair yourself. If, because of the appliance’s age, the appliance parts store no longer has parts or if the repair is out of your reach, it will be necessary to hire a professional service.
To repair is to extend the useful life of electronic equipment, to allow natural resources to be consumed gradually and at the same time, to achieve an economic benefit to the operation of the business at the same time. But the truth is that appliances wear out; they depreciate. As time goes by, the device will deteriorate because of the noticeable wear and tear that all durable goods suffer. This loss in value is approximately 10% per year.
This is where the concept of depreciation comes in. Amortization is a concept used to allocate the value of an asset over the years that we expect it to remain operational in day-to-day business. It consists of dividing the value of the acquired asset by the number of years we hope to provide service.
In the ninth year, one of the appliance parts initially cost 1,000 dollars, but now it cannot function without that part. If the appliance has two years left of the valuable life you had projected for it, and after the division above, it has a current value of $100, and we know that it will stop working next year regardless of whether we fix it or not. In any case, we decide to repair it at the cost of $200, and since the appliance is working correctly again, the current value increases by the value of the repair.
We add the repair cost of $200, and we get a result of $400, which divided by the two years of useful life still left, gives a repair cost of $200 per year.
At the same time, we reviewed washing machine offers on the market. A model similar to ours costs around $1,500 because prices are going up, with a useful life of 10 years. So if we divide its worth by its 10-year lifespan, we get $150 per year. This amount would be the depreciation cost of our new washing machine.
Since the repair cost would be $200, compared to the depreciation cost of $150, in this case, it is a better idea to buy a new appliance for two main reasons: because the useful life of the new washer is eight years longer and because the depreciation cost of the new washer is lower than that of the old washer.
A different consideration would be if the repair cost less than $150 since the annual amortization would be less than the purchase of a new washer, or if the repair would serve to extend the useful life of the washer by at least one more year. In this case, the repair would be recommended instead of purchase.