Abstract: Improving product quality will increase the industrial cost of quality improvement， which directly affects the cost of extended warranty and then indirectly impacts extended warranty pricing. Considering that when manufacturers sell products， they will price extended warranty at the same time， a correlation model between the enterprises’ optimal profits and the product quality and the extended warranty price was given by taking extended warranty price and product quality level as the decision variables and manufacturers’ profit maximization as the objective function. Finally， by exploring the sensitivity of the model’s parameters， the impacts of needs on quality sensitivity and the correlation between product defect rate and quality on making profits were obtained.

Key words: extended warranty, quality cost, pricing, sales strategy, warranty cost