How to Sell an Extended Warranty on Shopify

You can sell an extended warranty on Shopify in three ways: through a third-party provider, on your own with an add-on app, or as a separate product you list by hand. The right choice depends on who should pay claims and how much control you want over the offer.

This guide walks through the decision, the terms you need, pricing, setup and claims. For the basics of warranties versus delivery cover, start with the warranty guide. If you are still deciding whether an upsell makes sense at all, read extended warranty upsell: is it worth it? first.

What counts as an extended warranty on Shopify?

An extended warranty is extra cover a customer pays for on top of the product. In the FTC’s terms it is usually a service contract, not a warranty.

The FTC’s business guide draws the line clearly. Warranties “come with a product and are included in the purchase price.” A service contract is separate: it is made after the sale or costs the customer a fee beyond the product price. The FTC’s consumer page adds that an extended warranty “costs extra and might cover different issues than a manufacturer’s warranty.”

That matters for your store page. Your included warranty (for example, “1-year limited warranty”) stays in the product description. The extended warranty is an optional add-on with its own price and terms.

Which way of selling an extended warranty fits your store?

A few points to weigh:

• Third-party providers take on claims and admin. Read their terms on revenue share, which products qualify, and how they treat your customers when a claim comes in.
• Self-run means every claim is your cost. It only works if you price from real data and keep enough margin to fund repairs and replacements.
• A manual warranty product is quick to set up, but customers can add it without the product, remove the product and keep the warranty, or buy the wrong tier. Each mistake becomes a support ticket.

What do you need before you sell one?

Get four things ready before the offer goes live.

Written terms

Write the terms the way the FTC tells shoppers to read them. Its consumer page asks people to check:

• Cost, including any deductibles or fees each time the product is serviced.
• What is excluded, such as accidental damage or failures blamed on missed maintenance. The FTC’s advice: “If it isn’t listed in the contract, assume that it’s not covered.”
• Overlap with the warranty that came with the product. An extended warranty is “not a good value if it doesn’t offer more coverage.”
• Who takes care of repairs and how to file a claim.

If your terms answer those questions up front, you save customers the guesswork and save yourself the disputes.

The legal basics

If you make the service contract yourself, the FTC’s guide says federal law requires you to “list conspicuously all terms and conditions in simple and readily understood language.” It also says sellers who make service contracts on their products cannot disclaim or limit implied warranties.

State rules for service contracts may also apply. This is general information, not legal advice: read the FTC guide and check the rules where you sell.

A price per tier

Price each tier from your own numbers, not a guess. The method is in the next section.

A claims route

Decide now how customers will claim: a form or an email address, what they must send, and who decides. More on that below.

How do you price extended warranty tiers?

Work out the expected cost of claims, then add a margin.

1. Failure rate: the share of units that fail within the extended period. Use your returns and repair log.
2. Cost per claim: repair or replacement, plus shipping both ways and support time.
3. Expected cost per unit = failure rate × cost per claim.
4. Price = expected cost per unit + admin + margin.

For example, say a $200 product fails in its second year for 4 in every 100 units, and each claim costs you $90. Expected cost per unit is 0.04 × $90 = $3.60. A 2-year tier priced at $20 leaves room for admin and a margin. A tier priced at $5 barely covers claims.

Then choose how the price is expressed:

• Fixed amount works when products in a group cost about the same.
• Percentage of product price scales with the item, so one rule can cover a range of prices. A 10% tier is $20 on a $200 item and $50 on a $500 item.

Review the numbers every few months. If claims run close to warranty revenue, raise the price, shorten the period or narrow the products.

How do you set up an extended warranty with Sam?

Sam Shipping Protection includes warranty rules for stores that want to run extended warranties themselves. The in-app Warranty page says the feature is available on the Standard plan and above. The full walkthrough is in the warranty user guide.

1. Turn on the app embed. The offer shows on product pages through the same embed as the cart widget. See install and enable.
2. Create a rule. Open Warranty in the app menu and click Create rule.
3. Set the name and priority. When a product matches more than one rule, the rule with the higher priority number wins.
4. Choose the target products. Pick which products show the offer. Start with the items your pricing math supports.
5. Add offers. Choose Percentage of product price or Fixed amount, then add one tier per warranty length, such as 1 year and 2 years. Mark one tier as the default.
6. Edit content and appearance. Write a title and description that state what the warranty covers, and keep the full terms on your product page or a warranty page. Match the style to your theme.
7. Check the preview and save.

Shoppers see the offer on the product page before they add to cart. The chosen warranty is attached to the product in the cart, so each order shows which warranty the customer bought. You can pause a rule at any time without deleting it.

Sam handles the offer and the sale. It does not decide or pay warranty claims: your terms and your claims process do that.

How should you handle extended warranty claims?

Keep warranty claims separate from delivery claims. A product that arrives broken is a shipping problem. A product that fails in month 14 is a warranty problem. Mixing them confuses customers and your numbers. See shipping damage vs warranty claims for how to route each one.

A simple warranty claims flow:

1. One entry point: a form or a dedicated email address linked from your warranty terms.
2. What to send: order number, a description of the fault, and photos or a short video.
3. Check the order: confirm the customer bought the extended warranty and that the claim falls inside its period.
4. Decide within a stated time: repair, replace or refund, as your terms say.
5. Log every claim by product: fault type, months since delivery and cost. This log is what you price from next time.

For writing the base warranty page that sits next to your extended tiers, see how to offer product warranties on Shopify.

What mistakes should you avoid?

• Pre-selecting the warranty. Keep the offer optional and let customers choose it.
• Overlapping cover. If your included warranty already covers year one, a “1-year extended warranty” adds nothing. Start the extended period where the included one ends, or add cover it does not have.
• Vague terms. “Full protection” with no exclusions invites disputes. List what is and is not covered.
• Offering it on everything. Cheap or very durable items rarely justify it. The FTC notes an extended warranty “might not be worth the cost if a product isn’t likely to need repairs”, and your customers will think the same.
• Pricing without data. A tier that sells well but pays out more than it earns is a loss, not an upsell.

How do you know if it is working?

Track a few numbers each month, per product:

• Attach rate: the share of eligible orders that include a warranty.
• Warranty revenue versus claims paid under it.
• Support tickets and complaints about the offer.

A low attach rate may mean the offer is unclear or the price is too high for the product. Claims close to revenue mean the price or the product list needs work. Rising complaints usually point to terms that are hard to find.

Extended warranties cover the product over time. Delivery problems are a separate risk; to cover lost, stolen and damaged packages, see the order protection guide.