Industrial Heat Pumps & Electrified Thermal Systems worked example

Warranty Reserve at 99% warranty coverage share: a worked example in industrial heat pumps & electrified thermal systems

What does the result look like when warranty coverage share reaches 99%? The full calculation is worked below with real intermediate numbers. Use it when finance, product management, and aftermarket teams need to set reserves for compressor, control, refrigerant, or heat exchanger claim exposure.

The inputs for this scenario

  • Expected warranty claims: 18 claims (unchanged)
  • Average cost per warranty claim: 4,200 $ / claim (unchanged)
  • Warranty coverage share: 99 % (raised for this scenario; the documented default is 90)
  • Fixed warranty support cost: 15,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Variable warranty reserve = expected warranty claims × average cost per warranty claim × warranty coverage share) to the inputs above produces each figure below.
  • At this operating point the engine returns 89,844 $ for total warranty reserve, the number this scenario is built around.
  • At this operating point the engine returns 4,991 $ / claim for average cost per warranty claim.
  • At this operating point the engine returns 74,844 $ for variable warranty reserve.
  • At this operating point the engine returns 15,000 $ for fixed warranty support cost.

How this compares with the baseline

  • Against the tool's baseline example, where warranty coverage share sits at 90% and the headline result is 83,040 $, this scenario comes in 8.19% above the baseline at 89,844 $.
  • A figure at this level is achievable when warranty coverage share is genuinely sustained, not just peaked for a shift. It relies on an expected claim count and average cost; a single major compressor or controls failure can dwarf the average and exhaust the reserve.

Results at a glance

  • Total warranty reserve: 89,844 $ (headline result)
  • Average cost per warranty claim: 4,991 $ / claim
  • Variable warranty reserve: 74,844 $
  • Fixed warranty support cost: 15,000 $

Run it with your numbers

  • Every input above is editable in the live Warranty Reserve calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.