HP exec says quiet part out loud when it comes to locking in print customers

HP is squeezing more margin out of print customers, the result of a multi-year strategy to convert unprofitable business into something more lucrative, and says its subscription model is "locking" in people.

Tech vendors – software, hardware, and cloud services – generally avoid terms that suggest they're perhaps in some way pinning down customers in a strategic sales hold.

But as Marie Myers, chief financial officer at HP, was this week talking to the UBS Global Technology conference, in front of investors, the thrust of the message was geared toward the audience.

"We absolutely see when you move a customer from that pure transactional model ... whether it's Instant Ink, plus adding on that paper, we sort of see a 20 percent uplift on the value of that customer because you're locking that person, committing to a longer-term relationship."

Instant Ink is a subscription in which ink or toner cartridges are dispatched when needed, with customers paying for plans that start at $0.99 and run to $25.99 per month. As of May last year, HP had more than 11 million subscribers to the service. Since then it has banked double-digit percentage figures on the revenues front.

By pre-pandemic 2019, HP had grown weary of third-party cartridge makers stealing its supplies business. It pledged to charge more upfront for certain printer hardware ("rebalance the system profitability, capturing more profit upfront").

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HP also set in motion new subscriptions, and launched Smart Tank hardware filled with a pre-defined amount of ink/toner. These now account for 60 percent of total shipments.

Myers told the UBS Conference she was "really proud" that HP could "raise the range on our print margins" based on "bold moves and shifting models."

HP's moves are designed to up its bottom line in a world that's printing fewer pages. HP's Printing division margin has risen from 14.8 percent in fiscal 2020 to 18.9 percent in fiscal 2023.

An old industry factoid from 2003 was that HP ink cost seven times more than a bottle of 1985 Dom Perignon. HP isn't alone in these sorts of comparisons – Epson was called out by Which? a couple years back.

Something tells us that Myers' audience at the UBS gig might not view the cost of printing the same way as the rest of us. ®