The heating element of my Miele washing machine broke after about 4 years, and a genuine spare part would have cost 100€. I got a 3rd party replacement part that looks completely identical for 20€. I'm pretty sure there's still a healthy profit margin on that, since they cost half of that on Ali Express. And if the original part breaks after 4 years, the aftermarket part can't be much worse.

The only reason that Miele spare parts are so fucking expensive is because they make a lot of money with service. They don't want people fixing their own machines for 20€, they want to have a Miele service person come and swap the part for 250€.

EDIT: And don't tell me that logistics for a heating element are hard. All Miele washers have been using the same heating element for 15 years or so, it's a drop in replacement for the previous version of the part, and it's probably also the single part that breaks most often. That part should be easy to stock and the cost to do so should be trivial.

Looks identical and is identical are two different concerns though. I bought a (used) dryer from a small appliance vendor that looked identical to the new one right next to it for half as much. It was only a year later when it stopped working and I opened it up that I discovered where a thermal fuse should be there was just a straight piece of non high temp wire that had melted and thankfully not burned my house down when it failed. Which isn't to say that first party parts may not be marked up for profit, just that external looks of things don't tell you anything about the actual internal construction.

I agree with your point in general. I have bought spare parts from sketchy websites in the past and sometimes they are not as good as the original. You can usually tell the difference if you look at them closely.

But heating elements are very simple parts, and I bought it from a reputable local store, so I don't really worry that I'm getting an unsafe part. It's probably going to fail in a few years due to corrosion just like the original part (we have very hard water), and then I'll swap it again.

This was responding to a comment saying that the cost was justified by logistics issues even if the part itself was dirt cheap. The fact that you can in fact find way cheaper parts shows that the logistic argument is BS.

> straight piece of non high temp wire that had melted

I am not sure if that is what you mean, but to me it sounds like they might have purposefully put there so that it works like a thermal fuse.

It's typical to have a markup goal of at least 10x going from place of origin to destination market. It is a scam. Source: involved in electronic design and manufacture.

It's not a scam - they just don't particularly want to be in the business of supplying parts, so they charge a premium. You can buy an alternative if you like.

Not markup on the parts. The whole product you are initially sold.

The conversation is about the disparity in pricing between parts as spares and parts assembled into the original product.

Heating Element sounds just the trick to start a fire

Differences beyond 2x are still a clear indication that official replacement parts are a scam.

Also, the costs were not so absurdly high 20, 40 or 60 years ago!

Making a profit, even a large one, is not in and of itself a scam.

AFAICS making a profit without providing an equitably commensurate value in return, as consideration for the payment the profit comes from, is the very definition of a scam.

Trying to make the math easy, if official parts cost $80 to produce due to licensing or whatever, and are sold for $100, is it necessarily a scam if you can produce functionally similar parts without the licensing concerns for, say, $10, but charge $90 for them?

Huge profit margin, but you're able to produce much more cheaply than a competitor. Some would say you earned that margin, and in a fair and open market if someone else can also produce them for $10 you'll see prices start falling quickly. If they can't, I don't see how it's a "scam" for you to make money in that scenario.

> fair and open market

Again the same strawman. There is nothing "fair and open" in price gauging replacement parts in a market where buyers cannot compare quality, reliability, durability and TCO across products, replacement parts, repair services and guarantees.

Nice strawman there.

> Differences beyond 2x are still a clear indication that official replacement parts are a scam.

How are you not saying that they're making too much money and it's therefore "a clear indication" that it's a scam?

I'd love to be told why I'm wrong rather than just "hurr durr strawman"

Read my message again and read your reply again then.

Selling replacement parts with an unreasonable markup is a form of bait and switch: the customer buys the product thinking that it will have a given TCO over its lifetime. Only after some time the customer learns that the TCO is much higher when a replacement is needed.

You twisted my words by claiming that making a profit is not a scam.

> The only reason that Miele spare parts are so fucking expensive is because they make a lot of money with service. They don't want people fixing their own machines for 20€, they want to have a Miele service person come and swap the part for 250€.

Just get a household appliances insurance policy.

I have some Miele kit, and I have an insurance policy.

If something breaks, I call the insurance company, get a code. Then I call Miele and book a service appointment using the code. As a result, I have never paid a thing to Miele, not parts, not labour. But I still get official Miele engineer and official Miele parts.

And for some of my older Miele kit (10+ years), they've been out a lot, because the insurance company still deems it more economical to repair than to get Miele to ship me a new one.

> Just get a household appliances insurance policy.

If the goal is convenience, then definitely. Home insurance policies are quite a lot more expensive than actual repair costs are likely to be. Which of course is expected, the product being sold is peace of mind and convenience -- both of which people happily pay a premium for.

> Home insurance policies are quite a lot more expensive than actual repair costs are likely to be.

Hahaha that's a good one... especially as we're talking about Miele here. ;-)

And you're factually wrong anyway.

I didn't say "home insurance", I said "household appliance insurance". Different thing, unless your home insurance happens to cover appliances.

My household appliances insurance is not expensive. It covers 5 appliances, unlimited call-outs, and you don't get screwed at renewal time if you've claimed on the insurance.

As I said, I've had Miele out A LOT over the years and I've never paid them a penny, and trust me on some of my older large appliances they've pretty much replaced 100% of the internal parts.

Insurance companies operate at about 17% over premiums. Which means, for every dollar someone spends on insurance the company pays $0.83 in claims. This happens at a population level. Maybe you individually have a statistically above average amount of claims and collected more money than you spent. In which case congratulations. Maybe you are in a subpopulation (5x Miele owners) that the company is not accurately accounting for in their actuary tables. In which case the more this subpopulation signs up for insurance the higher premiums will increase, and perhaps if large enough the actuaries will catch on and raise your premiums as a subgroup.

Either way, the insurance company will turn a profit from premiums. I'm glad this policy has paid off for you, but "reducing costs" is not a good reason to purchase insurance. Insurance reduces risk and makes expenses more predictable.

The math isn’t as simple as you make it out to be. See insurance companies have volume and can negotiate better rates and policies. For example they can get 30-50%labor rate discounts or negotiate lower costs for recurring visits and discounted parts costs. As such is perfectly possible for insurance to be cheaper than uninsured services.

In which case it is less about being insurance and more about being an appliance servicing company - even if the work is outsourced.

Put the two together - insurance and appliance servicing company = your described scenario.

Exactly a lot of These companies are like hmos of appliances. Health insurance in the us isn’t really insurance either. If it was pure insurance most people would only by catastrophic

In sum, insurance companies are not selling their product at a loss, and if they are operating efficiently, they aren't selling their product to you at a loss either.

As always the adage "if you can afford to self-insure, you should" applies. There are two reasons you should buy insurance: because you are required to by law, or because the cost of covering replacement or repair would be problematic (either financially or logistically).

The other issue with appliance insurance or extended warranty and the like, it dilutes the obligation of companies to honour consumer guarantees. Certainly in Australia companies have been fined and otherwise penalised for promoting paid extended warranties when they should have been instead offering to make sure they meet the "fit for purpose" obligations

There is one additional reason: if your circumstances make it likely that you will claim more than others, due to a cause that is not accounted for in the fee calculation.

The insurance company may have a deal with the repairers, so they're able to get repairs done cheaper than you can. If that's the case, it may be cheaper (on average) to have insurance than not to.

To the extent that they get special pricing, the insurance company will be pocketing the difference as extra profit, not passing it on to you.

In fairness, I wouldn't be surprised if many of the people who have these insurance policies fail to claim on them or decide to replace their item when it breaks regardless of the insurance policy. A bit like the gym membership model, 90% of people don't use it at all.

Also like warranties.

e.g. I have a Samsung 970 EVO Plus SSD drive that has just failed, and lost some of my important data. Its got a 5 year warranty and is only a year old. I doubt I will bother to go through the warranty claims hassle, because the end result is not worth it.

I would have to send it back to Samsung, with my commercially important data on it locked in the chips, and get back another drive which it seems is not particularly trustworthy to rely on again. I've had 2/5 Samsung SSD drives fail and won't be using them for anything important again, I've just ordered a Hynix to replace it.

Another case, I have had a washing machine fail under warranty recently, again about 1 year into a 5 year warranty. It took 7 weeks and many frustrating phone calls before someone came around to actually fix it. Next time I won't bother to get a new washing machine, I will get a second hand one, and when it breaks I will get another second hand one immediately so I don't have the problem of not having a washing machine for sooo long.

If you're at all handy with tools, fixing appliances is normally pretty simple. The parts are readily available and often you don't need more than a few screwdrivers and wrenches to do the job. I've saved thousands of dollars fixing appliances myself vs. discarding them and buying new.

The door hinge on our refrigerator started cracking after about 1.5 years. It was covered by the credit card warranty, so I tried working with a repair company. They charged $150 to show up and say they couldn't do anything, then quoted $900 to replace the whole door. It was a $1200 refrigerator. I spent an hour and fixed it myself with some aluminum extrusion and a few rivets, then got reimbursed $700 by the credit card company.

My sister in law's oven failed with the self cleaning lock activated. It's an in-wall unit so the repair tech could only think to start cutting apart the wall. Instead, I took a hacksaw blade and painstakingly sawed off the lock. Since I was already committed, we then pulled out the unit and bypassed the failed thermal switch long enough to "unlock" the mechanism. That probably saved at least $1200...

Yeah my father is a handyman and I did lots of house and other maintenance for quite a few year, in balance to the very mental aspects of software! However for now I'm focusing my creative energy on higher value economic activities and spending spare time on the beach yoga or music instead. Someone else can fix that stuff for now :)

>Just get a household appliances insurance policy.

Any insurance is a conflict of interest. The entity responsible for paying out is the same entity responsible for if/how much you get paid out. Any for-profit insurance company is incentivized to pay out as little as possible, if any. Any litigation is likely to cost way more than the payout.

> Any insurance is a conflict of interest. *

* Except group catastrophic

Ultimately, it's a math problem that must have a positive answer for the insurance company. If 100% of policyholders make claims, you generally pay that profit yourself.

However, in group catastrophic policy, the numbers add up. Substantially <100% of people file claims, so premiums can be set much lower, effectively giving you protection against an unlikely scenario at reasonable cost.

My grandfather was an actuary, and constantly griped that low-deductible policies shouldn't even be called "insurance."

If you want to create something like a national health benefit, do so. But don't confuse people by mislabeling it.

Group catastrophic, like all other insurance, is negative expected value in first-order effects, but improves predictability.

This is not fundamentally different from low-deductible policies. (Which may do more, proportionately to cost, to improve predictability if most variance is the number of frequency of low-cost events)

For those who use them. I avoid doctors as much as possible, so if I see one it is likely closer to a catastrophic situation than routine. I would much rather have cheap catastrophic insurance than more expensive low-deductible, because I am unlikely to use the latter.

Why not call it a buying club? You basically use volume to force negotiation of lower price

>Ultimately, it's a math problem that must have a positive answer for the insurance company. If 100% of policyholders make claims, you generally pay that profit yourself.

Not necessarily. Simply holding onto large piles of other people's money can he profitable - eg banks.

That's part of the math problem.

> Any insurance is a conflict of interest. The entity responsible for paying out is the same entity responsible for if/how much you get paid out.

What are you on about ?

Let me spell out how my appliances insurance policy works:

      1. I call $insurance_company and say "my appliance is broken"
      2. $insurance_company says "Ok, here's a code, call Miele, give them the code"
      3. Miele sends out engineer with parts who fixes the appliance
      4. I sign engineer's job sheet.
      5. The end.

To reiterate:

     - At no point have I given Miele my credit card. 
     - At no point have I given the Miele engineer my credit card.
     - At no point have I received a bill from Miele.
     - At no point have I paid Miele in any way shape or form
     - $insurance_company has taken care of everything, 100% of everything, every single time.

But how much does the insurance cost? Are you positive this insurance, over the years, is cheaper than what you would have paid Miele directly?

> But how much does the insurance cost?

Mine is about 350 a year, but they work out a rate per-appliance and then give a discount on the total, so you can pay more (or less) depending on how many appliances you cover.

> Are you positive this insurance, over the years, is cheaper than what you would have paid Miele directly?

Absolutely.

A Miele call-out will set you back 150 call-out + 100/hour, plus parts on top.

Or (if Miele agree) you can pay a "fixed-price" 300 which covers parts and labour (but again, this is subject to Miele's agreement and that agreement is given on a per call-out evaluation).

And as I said, one of my Miele appliances is 10+ years old, they've been back a good few times replacing increasingly major parts each time, so now the only thing 10+ years old about it is the external casing !

Even if I bought the "official" Miele parts myself, I value my time at greater than zero ! So its still cheaper than me buying the parts and spending a half a day pulling out appliances and fitting parts.

And given the price of new Miele appliances, its not exactly like after 5 years I could afford to replace everything with brand new appliances, since that would cost A LOT more than 350x5.

And yet, on average, the insurance company must be making a profit on their Miele policies otherwise they would not sell them or would not stay in business.

It sounds like you have a lemon appliance and were fortunate that you had the insurance.

Begs the question of why you keep buying Miele.

I've had exactly one home appliance failure in the last 10 years - an old fridge that finally died.

You must not live in the US. I see it's a German company, they have much stronger laws governing how they operate. In the US, there are laws, but they are scantly enforced. "Buyer beware." Corruption is gonna crash the insurance industry before too long.

It seems to me insurance companies must break into two categories. The first are honest agents operating on a house-always-wins model. Meaning, over a sufficiently large time and sufficiently large customer base they pay out less than they receive, but only a normal cost + profit margin amount less. Pay out more than that and they go out of business.

The second category would be dishonest agents, which try to avoid payout and have windfall profits and basically skirt the line where lawsuits and reputational damage make that kind of profit impossible. Long term operation as such a business is challenging due to word of mouth, so they must often rebrand or change business names, or just make their products too confusing to understand.

Aliexpress vendors operate on very low margin. Compared to Miele, considering Washing Machines are such low volume products, and their brand commands premium, selling it at 80% margin gross doesn't sound too ridiculous.

To make it clear, I didn't buy the spare part from Ali Express. The spare part would have cost around 10€ on Ali Express.

I bought it for 20€ from a reputable local electronics parts dealer. The part I got for 20€ was a high quality 3rd party heating element compatible with Miele washers.

Replying to myself to add another data point:

Other manufacturers manage to sell spare parts at more reasonable prices. I just checked a random washing machine from Siemens, and they sell the heating element for 28€. Not quite as affordable as the aftermarket part I got, and they'll probably charge 5-10€ for shipping, but it's a lot more reasonable than the Miele part.

The $20 part outsourced its engineering to the $100 part organization. That’s not to say understanding that means you shouldn’t save yourself money.

Miele came to my house and replaced my heating element for free on an 8 year old machine !

If it was out of the very generous warranty, I expect it would cost loads.

> The seeming ridiculousness of the price difference is another way of looking at how hyper-efficient modern mass manufacturing is.

Reminds me of the Planet Money multipart story where they made a tshirt, from scratch. Bought cotton from a farmer, shipped it to a textile industry, contacted a tshirt making company, shipped it to the US.

The bulk of the cost in the end came from transporting the tshirt from the harbor to the store where it was sold.

And it also pretty much sums up how most people in Tech have minimal understanding of Supply Chains and logistics works. Even distribution alone, within a single country ( ignoring the cross border logistics ) is complex enough.

We're used to every "part' being downloadable at zero real cost.

It's hard to think about physical reality when that's how most of your life is.

Just my 2 cents, but worth noting I do run a retail business and about 20% of our revenue comes from old electronics we refurb in-house.

The reason that spare parts are so expensive has nothing to do with the cost of logistics or the scale of mass-production. The warehouse can simply order an extra pallet of parts and leave it on a rack as spares. Hell, this is probably what all of these businesses do.

The real reason the pump costs 100 pounds is because the customer has no reasonable alternative, so they will (begrudgingly) accept that before spending 400 pounds on a brand new machine.

If they found out the specific part number of the pump and ordered something compatible from an alternative supplier (I used to go to this effort when younger), it generally ends up costing around 1/5 of the price of an official one.

Why can aftermarket suppliers make the same part much cheaper?

Sampling error. Aftermarket suppliers only get involved when they can make and sell a replacement part at a compelling price point.

I don't buy that as a factor. Given that the OEMs overprice the parts that they have to compete with aftermarket suppliers for, why would they NOT overprice the parts for which they have no such competition?

Note that being unable to profitably replicate the part does not necessarily mean that the part is naturally expensive, or that the OEM already sells it at a reasonable price. The part could just as well be hard to reverse engineer and QA for a third party, or the effort to do that might not be worth it given unknown level of demand, etc. OEM can actually have a natural price advantage over third parties in such complex parts.

As was just pointed out, making the part isn’t a large fraction of the cost of a replacement part. So, they need to both make the part and handle the full logistics chain to undercut prices.

Aftermarket suppliers have even more of a logistical burden than the OEM. They cater to a smaller market, and need to set up manufacturing for the part (which the OEM already has). Yet they still can sell the parts for substantially less.

This is called survivorship bias https://en.wikipedia.org/wiki/Survivorship_bias.

This works when a part is widely used, creating a decent market for the part.

If the part is only used say in a single model of dishwasher, there will never be enough demand to justify the creation of an aftermarket one.

We have many industries of examples where this solved also by market forces as well

Cars as an example, the key here is to allow the market to MAKE replacement parts, and compete to selling them. Stop vendor lock-in

If I want to buy replacement part for my car I often have a selection of 3-5 different vendors making the replacement in addition to the OEM.

You can not tell me that appliances, electronics, etc are that much different from cars that similar solutions can not be found. Especially given that most of these things are just off the shelf parts that the OEM combines into a product anyway

There are many third-party appliance/electronics parts companies.

Yeah - and the problem here is that there are many parts.

Getting a plastic wheel for my dishwasher's lower roller shelf is $12 from a third-party source (it's $16 from the manufacturer). It's like four grams of plastic. But the rarity of demand just doesn't make it make sense to keep in stock.

(That sort of thing has me halfway convinced to buy a 3D printer. I just don't have anywhere to put it yet.)

Make sure to check for generic wheels too! I think 90% of dishwashers have the same wheels but with different parts numbers.

Good shout! The wheels are largely interchangeable but the wheel mounts on the basket aren't (and one of them popped free and melted on the heating element just this week!).

true, however the current trend is to lock down the parts and prevent companies from making replacement parts via the use of DRM, serialization, and other controls that have nothing to do with security, usability, or anything other than preventing repair

Hell even Paper has DRM now, see the Latest Dymo label printers

How do these parts get recertification ie how do we know the anti skid brakes still work after using third party wheel speed sensor on just one wheel?

If the third party parts went through the same certification process, they would be more expensive than genuine parts.

It is based on specifications and standards. In this case the original part has some specifications that aftermarket parts can meet.

> That's the cost of that part, being delivered to the assembly line, in bulk quantities, at a regular, predictable order cadence from the upstream supplier

I am not buting this reasoning - the assebly line costs money to run, worker's time and salaries need to be paid, quality control and warranty to be done. A part sold by itself needs none of those things.

While you are taling to me about how difficult logistics of a $200 part justifies a 500% markup, i can buy a $3 led from China with free shipping. This doesnt add up

That assembly line's costs are amortized over the rate of production (high): that's the essence of mass manufacturing.

> A part sold by itself needs none of those things.

A part sold by itself needs so many more things!

Where do you store it? How do you organize it there? How do you keep track of your inventory? How do you re-order new inventory? How much do you re-order? How long do you typically have to store? How do you source substitute suppliers when your original goes out of business? How do you QC stock? Etc. Etc.

All of that for multiples of the part count that goes into a single model, because you sell more than one model.

You can buy a $3 LED from China (see sibling comment for economics on free shipping) because you're buying the current model / whatever version they feel like giving you.

"Part specs may be subject to variation" doesn't work so well with more complex systems.

"Where do you store it? How do you organize it there? How do you keep track of your inventory?"

I am sorry but these questions come across as extremely silly - this is not rocket science, even manufacturers of beer have to figure out these things, if you can't manage a warehouse, you would not be able to be any kind of serious manufacturer in the first place.

They're not difficult, but they are expensive. Which is what ends up in prices.

Check warehouse rates or spot freight shipping.

It is not as silly as it sounds. I am working for a big manufacturer (of products that don't require any spare parts) and the warehouse space is minimal, sometimes raw materials from the suppliers are unpacked and weighted directly on the production line, not going through any warehouse; the finished products are wrapped at the end of the line and loaded directly in the trucks, not going in a local warehouse.

That means if a new requirement appears to add something in the warehouse, space needs to be added. In some cases space does not exist around the plant, so you need to get some space in a warehouse somewhere else, most probably managed by a third party with higher costs, then integrate an inventory management software with that third party warehouse. This is already very complex for a manufacturing plant with zero budget for IT projects and the cheapest IT people needed to keep the lights on.

Wow, no one says you have to get a spare part to a customer tomorrow morning. Just grab one before it goes to assembly line, ship it with the actual completed machines to a distribution center where it will go to the customer from there. There's nothing "new," except at the beginning/end of the chain, just add a few more of those parts to the next order of them. If it will impact operations to take a few from the beginning, some of those spares will have to be delayed. That's ok, tell the customer 6-8 weeks to deliver a spare part. That was pretty standard shipping times when I was younger.

> Just grab one before it goes to assembly line, ship it with the actual completed machines to a distribution center

So customers can only order replacement parts while assembly lines are currently doing production runs?

This is sort of liking saying “how hard could it really be to do a special software build for one customer?”

I guess it depends on how you CI and build process is setup. Caddy does an excellent job of doing per-customer custom builds.

If you just "grab one before it goes to assembly line" this will likely have a huge impact on the assembly line. Factories put a lot of effort into managing inventory of material. Lead times on parts can often be in the months if not years. If there are unexpected shortages of parts and subassemblies, the hourly or daily costs of a line down can be enormous. Shipping one of something to an end consumer is usually a completely different supply chain than shipping containers full of finished goods to distribution centers which then go to retail. Taxes, tariffs, shipping methods, etc are all completely different. You can't just commingle things like this easily.

We once had to drive special parts for one car by taxi cab to the factory, in single figure quantities, to not let the line stop and pay the fine... "just in time" production can be hell...

What if it's no longer being manufactured or on assembly line? HOw do you grab it before assembly line?

And comingling parts with completed machines? Heh. You have no idea of the distribution chain of b2b retail goods vs b2c service repair and such.

6-8 weeks repair time is still common, especially nowadays.

This is generally because USPS effectively subsidizes international shipment. The same $2 LED shipment might be $10 DHL (and free shipping isn’t free, the seller is making their margins with shipping costs included).

So you allow the manufacturer to charge for delivery (based, on, say, some average delivery cost for the weight, rather then allowing inflated S&H costs to be a new profit centre rewarding unreliable items).

Or, if you really want to stamp down about it, you do not allow them to recoup delivery costs and that's their punishment for making an unreliable machine in the first place.

Yes, and in your perfect world - manufacturers know full in advance about part life? There are hundreds of parts that make up the build of material of an appliance.

This means simply that parts won't ship and service is only done at approved manufacturer facilities. OH wait...

Not anymore, Trump modified the EMS packet from china to USA thing to remove subsidies. https://www.theatlantic.com/technology/archive/2018/10/trump...

This was 2018.

> i can buy a $3 led from China with free shipping

International shipping is not even close to being a level playing field:

"Arcane rules established by the 144-year-old Universal Postal Union make it possible for a Chinese e-retailer to send a package across the Pacific to a customer in the U.S. at a cost lower than what an American competitor would spend to ship the same item to a neighboring state"[0]

[0] https://www.bloomberg.com/opinion/articles/2018-10-18/trump-...

Interestingly, the same is valid for Europe - I got tons of shipping from Shenzen for free, and the item costed like 1$ (ie USB cables).

That’s a 2018 article and EMS rules have materially changed since then.

I am not in US

You’re probably in a country in the UPU.

If that's true, the weight of a spare part should correlate closely with its price, yet spark plugs are an order of magnitude cheaper than oxygen sensors.

There are a lot of factors in supply chain costs aside from weight. Order volume is a huge factor. If two parts have identical component costs and weights, but one is ordered in the UK say in the thousands per year, the end purchaser cost will be a lot lower than for a part where only a few people order one each year. In fact for the latter, it might not be possible to order it directly in the UK at all.

Oxygen sensors use platinum which makes them expensive.