Does DJI lose money on DJI Care

[adiru]

I just realized that in a year it covers two full replacements.

Lets say on average the average owner totals it twice within that one year span.
(it almost happened to me the first week I almost crashed hard but narrowly averted total disaster)

How would DJI not go broke at that rate?

Everyone knows the one year insurance is NOT renewable, thus lets say end of this year we hear about the Mavic 2. Lots of peole who started the insurance this year will be going all out on flying their mavic 1 and don't even worry about crashing.... and after a year of hard use, it is more likely that motors will burn out, etc and other accidents waiting to happen. so would claims not shoot through the roof by december?

I'm hearing DJI is sending out completely new mavics for the DJI care and not even bothering fixing them.

How can DJI afford to do this? Isn't the whole point of DJI care to make more money for DJI or are they doing it as a loss leader for some reason?

 

[Cyberpower678]

I just realized that in a year it covers two full replacements.

Lets say on average the average owner totals it twice within that one year span.
(it almost happened to me the first week I almost crashed hard but narrowly averted total disaster)

How would DJI not go broke at that rate?

Everyone knows the one year insurance is NOT renewable, thus lets say end of this year we hear about the Mavic 2. Lots of peole who started the insurance this year will be going all out on flying their mavic 1 and don't even worry about crashing.... and after a year of hard use, it is more likely that motors will burn out, etc and other accidents waiting to happen. so would claims not shoot through the roof by december?

I'm hearing DJI is sending out completely new mavics for the DJI care and not even bothering fixing them.

How can DJI afford to do this? Isn't the whole point of DJI care to make more money for DJI or are they doing it as a loss leader for some reason?

Economics isn't a strongpoint of mine, but I would say they're still making a profit in the end. You see the DJI Care service is to attract more customers into buying the drone in the first place by saying "Hey if you destroy your drone we'll replace for you with this service." The customer goes oh goodie an insurance policy and buys the drone. Most customers don't think to actually replace the unit if it still works so the $99 spent was unused and wasted. Profit goes to DJI. If the drone replacement does need to be used, the customer pays an additional $79 to replace the entire unit. The drone gets sent back and recycled and becomes either a refurbished product, or if possible gets used to make a new drone. That roughly breaks even, or may only be a minor less depending on the damage, or be a huge loss if it's returned in a thousand pieces or looks like it went through a "Does it blend?" experiment. Overall, I think they're still making gain in the end.

 

[james_mav]

I just realized that in a year it covers two full replacements.

Lets say on average the average owner totals it twice within that one year span.
(it almost happened to me the first week I almost crashed hard but narrowly averted total disaster)

How would DJI not go broke at that rate?

Everyone knows the one year insurance is NOT renewable, thus lets say end of this year we hear about the Mavic 2. Lots of peole who started the insurance this year will be going all out on flying their mavic 1 and don't even worry about crashing.... and after a year of hard use, it is more likely that motors will burn out, etc and other accidents waiting to happen. so would claims not shoot through the roof by december?

I'm hearing DJI is sending out completely new mavics for the DJI care and not even bothering fixing them.

How can DJI afford to do this? Isn't the whole point of DJI care to make more money for DJI or are they doing it as a loss leader for some reason?

I'm actually surprised DJI offers the program. Did they consider the number of drone users who will intentionally crash their Mavic in the 12 month in order to get a new one for $100? It might have been better to just offer an extended warranty for defects.

 

[adiru]

I'm actually surprised DJI offers the program. Did they consider the number of drone users who will intentionally crash their Mavic in the 12 month in order to get a new one for $100? It might have been better to just offer an extended warranty for defects.

Even with the data logged on the controller and mavic, how can they prove intentional from stupidity? (except in the most obvious of crashes)

 

[msinger]

Did they consider the number of drone users who will intentionally crash their Mavic in the 12 month in order to get a new one for $100?

That sounds like a silly thing to do since DJI sends out refurbished units to most (all?) people. You'd be trading in a used Mavic for another used Mavic.

 

[Cyberpower678]

That sounds like a silly thing to do since DJI sends out refurbished units to most (all?) people. You'd be trading in a used Mavic for another used Mavic.

But that Mavic would be like-new, which is most likely better than the current 1 year old Mavic.

 

[msinger]

Some people will try to work any system. I doubt the majority of Mavic owners would attempt such a scheme.

 

[Cyberpower678]

Some people will try to work any system. I doubt the majority of Mavic owners would attempt such a scheme.

Like I said above. ;-) I have mine to give me ease of mind.

 

[AlanTheBeast]

I just realized that in a year it covers two full replacements.

Lets say on average the average owner totals it twice within that one year span.
(it almost happened to me the first week I almost crashed hard but narrowly averted total disaster)

How would DJI not go broke at that rate?

Everyone knows the one year insurance is NOT renewable, thus lets say end of this year we hear about the Mavic 2. Lots of peole who started the insurance this year will be going all out on flying their mavic 1 and don't even worry about crashing.... and after a year of hard use, it is more likely that motors will burn out, etc and other accidents waiting to happen. so would claims not shoot through the roof by december?

I'm hearing DJI is sending out completely new mavics for the DJI care and not even bothering fixing them.

How can DJI afford to do this? Isn't the whole point of DJI care to make more money for DJI or are they doing it as a loss leader for some reason?

First off, not everyone buys Care Refresh, so that margin is locked in other than warranty provision that should not be booked to sales until the warranty runs out (or in 3 or 6 month chunks, anyway - depends on the beancounter-in-chief).

Then the DJI Care Refresh revenue also has to go on the books as allocated to that program at large and because it's open ended (for 1 year) the $99 cannot leave that provision.

At the start DJI have the margin, less the warranty provision, less the DJI Care Refresh (but that's extra cash IAC).

Over the course of time, a lot of people will actually never make a claim. They don't crash, they lose interest, whatever.

So a few people make the claim and figure, shucks, I'm only 2 weeks in and the repair is only $150, I'll pay that and keep the 2 Care Refreshes alive.

Or not - pay $79 and use up a CR.

As to DJI they look at the "hull" and salvage parts to rotate into the Care Refresh bins.

They add value (new parts + labour) to resurrect an MP and it gets sent to a customer.

Oh! Another $79 came in for that and goes to the "pool".

Sometimes an MP needs to be sent out new. Now that may not include (perhaps) the battery and rotors. IAC, parts pile up in the Care Refresh bins either way.

The cost there does NOT include warranty provision or margin or the saved parts. You can guesstimate that their manufacturing cost per MP is about 25% of retail. Less salvaged parts; plus labour.

In sum, given that their cost is a fraction of the retail price, plus you pay a premium ($99) to get the program and an additional $79, then $129 to exercise it, they at worst would break even, but likely turn a modest profit while making it seem to the client base that they are getting a "great deal". It's great optics from the client side.

Of course when they fail to deliver Care Refresh (as another poster is lamenting today in another thread), then it damages their reputation.

Oh, BTW, at the end of the year after sale, the entire warranty provision is recovered too (those clever bean counters) from liability to profit as well as unclaimed Care Refresh provision (though that might go into a general internal Care Refresh budget that gets raided by the bean-counter's boss from time to time in the name of shareholder return).

So, don't worry about DJI, they've modelled it well - an will adjust in the future to guarantee that it is not a losing proposition for them.

 

[pjd900]

If you look at what I (and others) have posted in the other CS thread, it would seem that DJI is currently being overrun with Mavic Care Refresh returns.
Some Refresh customers have reported being sent used, scarred Mavics registered to prior owners which were inoperable.

 

[adiru]

If you look at what I (and others) have posted in the other CS thread, it would seem that DJI is currently being overrun with Mavic Care Refresh returns.
Some Refresh customers have reported being sent used, scarred Mavics registered to prior owners which were inoperable.

Oh crap that aint good
can I make a case to get my 99 back?

 

[Robbyg]

LOL I was thinking the Opposite of the OP. How much money is DJI raking in with DJI care

AlanTheBeast in his post above lays out most of it. So keeping in mind that a $750 Mavic most likely cost DJI about $500 to produce. The main expense is the two main board inside the unit and in about 80% of the crashes those seem to be fine so they just get dumped back onto the assembly line were they are tested and inserted into a new drone. The second costly part of the Mavic is probably the Camera and Gimal. Those are probably always rebuilt at a special division of the company. The Plastic parts are probably in total a $20 cost and that's the parts that are most often damaged.

It's a win win for DJI because most most people will never use the refresh and those that do are most likely returning an item that they can salvage the expensive bits from and throw away the cheap stuff.

 

[Chris23]

No billion dollar company runs a program like this at a loss.

You say the average owner will make 2 claims in 1 year through operator/hardware failure? I find that hard to imagine. Fraudulent claims is a whole other topic.

To join the Care Refresh program it costs you 10% of the retail price, if you make a claim its another $79USD (7.9% of retail price). *If* you total your Mavic you'll get a replacement for an extra 17.9% of the cost of a new unit. Not bad value for the consumer, but this isn't going to be the case for most people considering they will happily own 1, and 1 only, Mavic for many years.

A second claim? Costs you a total of 30.7% of the retail price.

Both options are an expensive insurance policy if you originally joined in the knowledge that you're going to deliberately destroy the product. And, deliberately destroying a Mavic is definitely not at the forefront of 99% of Mavic owners minds.

I understand the (flawed, IMO) motivation to destroy your drone towards the end of the year "to make use" of the program and to update your item, but if you're willing to act fraudulently and live your life in such a manner then that's your prerogative. And you're stupid anyway for spending nearly 31% of the total cost of the unit on what amounts to a 1-year insurance policy... an insurance policy whose TOS state: "4) If the customer is found to have broken a DJI Care Refresh covered product on purpose, the service will be terminated automatically, and DJI will not offer a refund. If a customer is found to be causing accidents for financial gain, DJI reserves the right to take legal action."

 

[adiru]

No billion dollar company runs a program like this at a loss.

You say the average owner will make 2 claims in 1 year through operator/hardware failure? I find that hard to imagine. Fraudulent claims is a whole other topic.

To join the Care Refresh program it costs you 10% of the retail price, if you make a claim its another $79USD (7.9% of retail price). *If* you total your Mavic you'll get a replacement for an extra 17.9% of the cost of a new unit. Not bad value for the consumer, but this isn't going to be the case for most people considering they will happily own 1, and 1 only, Mavic for many years.

A second claim? Costs you a total of 30.7% of the retail price.

Both options are an expensive insurance policy if you originally joined in the knowledge that you're going to deliberately destroy the product. And, deliberately destroying a Mavic is definitely not at the forefront of 99% of Mavic owners minds.

I understand the (flawed, IMO) motivation to destroy your drone towards the end of the year "to make use" of the program and to update your item, but if you're willing to act fraudulently and live your life in such a manner then that's your prerogative. And you're stupid anyway for spending nearly 31% of the total cost of the unit on what amounts to a 1-year insurance policy... an insurance policy whose TOS state: "4) If the customer is found to have broken a DJI Care Refresh covered product on purpose, the service will be terminated automatically, and DJI will not offer a refund. If a customer is found to be causing accidents for financial gain, DJI reserves the right to take legal action."

I read the terms, still it is DJI's burden of proof that the customer caused an accident on purpose. It is not the customer's burden to prove that he did not cause the accident on purpose. No one is suggesting anyone commit fraud, which is illegal. All I'm saying is that you can bet at the end of the year I'm going to be a lot less careful compared to at the beginning of the year. I'm going to fly all out, to my heart's content, and no longer holding the Mavic by the hand and with training wheels and kid gloves. The worse that can happen is DJI decides not to Refresh me, as for DJI "service will be terminated automatically" (which I understand and realize is DJI's call and DJI's prerogative) and but to then decide to "take legal action" well good luck with that. DJI can be my guest. I'll be the one taking legal action if DJI falsely accused me of fraud, denies me DJI Care and then decides to take legal action against me wrongfully.

 

[Squamer]

One or more people at DJI would be getting fired if they were losing money over it.

 

[Chris23]

AlanTheBeast in his post above lays out most of it. So keeping in mind that a $750 Mavic most likely cost DJI about $500 to produce. The main expense is the two main board inside the unit and in about 80% of the crashes those seem to be fine so they just get dumped back onto the assembly line were they are tested and inserted into a new drone. The second costly part of the Mavic is probably the Camera and Gimal. Those are probably always rebuilt at a special division of the company. The Plastic parts are probably in total a $20 cost and that's the parts that are most often damaged.

Hmmm, let me do some back of the hand gorilla maths .......

..... there is absolutely no way it costs the world's largest drone manufacturer $500 to mass produce 1 unit. I know it's not an equal comparison but when I build a drone the retail cost for components amounts to $200-$300 depending on features (GPS, etc). And yes, I get that I didn't develop an app, or design a drone that's even remotely similar in specs as the Mavic Pro but the costs of the individual components are almost always less than $30 each (Edit: $30 retail, might I add).

Actually, I might look into this a bit more and write an article haha

 

[Robbyg]

If you look at what I (and others) have posted in the other CS thread, it would seem that DJI is currently being overrun with Mavic Care Refresh returns.
Some Refresh customers have reported being sent used, scarred Mavics registered to prior owners which were inoperable.

Can you point me to that?
I read the thread and all I see are a lot of guys talking about the clauses in the DJI refresh saying that you may get back a used Mavic or a new one. So far every single return I have heard about involved the person getting back a brand new Mavic. I would love to see the post and the pictures of one that was sent from DJI with scratches and an already registered serial number.

 

[msinger]

Here's what the DJI Care Refresh FAQ states about Mavic replacements:

 

[Chris23]

Can you point me to that?
I read the thread and all I see are a lot of guys talking about the clauses in the DJI refresh saying that you may get back a used Mavic or a new one. So far every single return I have heard about involved the person getting back a brand new Mavic. I would love to see the post and the pictures of one that was sent from DJI with scratches and an already registered serial number.

Curious to read about it, too.

And is the buzz online about the program similar to the online phenomenon, "I only write about something to complain". Maybe this is a small proportion of claims? I guess we'll never truly know unless DJI tell us themselves.

 

[Chris23]

Here's what the DJI Care Refresh FAQ states about Mavic replacements:

View attachment 6506

And cosmetic scratches or prior registration has zero relevance to performance and reliability.