Mmm..... I think that for what it offers and the price you pay (first year is free, get it before that year is up to extend) it really comes out to around 100 or so a year. That's... kind of a lot and they make a ton of money on it.
However.... what does it cost to have something fail? That's pretty much the reason people buy it. Peace of mind.
And, if I may, I think a strong deciding factor is that Apple has made customer service NOT SUCK. In the past it's always (call, support line, walkthrough, number, ship, wait 2 weeks or more, get it back).
Now it's (call, set up appointment, walk in, hand box, walk out, come back in a few days (or less depending on what it is), go home.
They have actual stores that do in house repairs and that goes a long way.