Outdoor Power Equipment worked example

Warranty Reserve at 2.88% expected claim rate: a worked example in outdoor power equipment

Here is what the math looks like when conditions slip. We hold every other input steady and drop expected claim rate to 2.88%, then walk the calculation through step by step. Estimate the warranty reserve to set aside for an equipment build from units under warranty, expected cost per claim, claim rate, and fixed program cost.

The inputs for this scenario

  • Units under warranty: 5,000 units (held at the documented default)
  • Expected cost per claim: 85 $ / claim (held at the documented default)
  • Expected claim rate: 2.88 % (the input this scenario stresses; the baseline uses 4)
  • Fixed warranty program cost: 2,500 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Expected claim cost = units under warranty × expected cost per claim × expected claim rate.
  • Total warranty reserve works out to 14,740 $ at these inputs, and this is the headline figure for the scenario.
  • Warranty reserve per unit works out to 2.95 $ / piece at these inputs.
  • Expected claim cost works out to 12,240 $ at these inputs.
  • Fixed warranty program cost works out to 2,500 $ at these inputs.

How this compares with the baseline

  • Against the tool's baseline example, where expected claim rate sits at 4% and the headline result is 19,500 $, this scenario comes in 24.41% below the baseline at 14,740 $.
  • The practical read: the gap between this scenario and the baseline is entirely attributable to expected claim rate, so recovering it is worth quantifying in dollars before considering equipment or staffing changes. It assumes a single blended claim rate and average claim cost; if your portfolio mixes a robust commercial mower with a fragile entry-level trimmer, run them separately or the reserve will be wrong for both.

Results at a glance

  • Total warranty reserve: 14,740 $ (headline result)
  • Warranty reserve per unit: 2.95 $ / piece
  • Expected claim cost: 12,240 $
  • Fixed warranty program cost: 2,500 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Warranty Reserve calculator, set expected claim rate to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.