A warranty is a commitment to return and correct work that fails within a stated period.
Two kinds
Workmanship — the business's own promise covering its labour. Its length is a commercial choice and is frequently used to compete.
Manufacturer — the equipment maker's promise covering the part. The manufacturer supplies the replacement; it does not usually pay for the labour to fit it, which stays with the business.
That gap is the one most often missed when a warranty is quoted to a customer as though it covered everything.
The cost arrives later than the revenue
Work done under warranty consumes labour, parts and travel, and produces no invoice. It lands in a later period than the job that created it.
So a business measuring job margin at completion overstates it, by whatever the warranty work eventually costs. See callbacks and return visits for how that rate is tracked.
Pricing for it
A warranty with a known claim rate can be priced. If historic warranty work runs at some percentage of revenue, that percentage belongs in job pricing as a cost of doing the work.
Extending a warranty from one year to five without changing price is a price cut whose size is unknown until the claims arrive.
Extended warranties sold to the customer
Where a warranty is sold separately for a fee, the money is received up front for an obligation running for years. It is deferred revenue rather than income in the month it is received.