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HP Inc is piloting a paper delivery service for Instant Ink subscribers as it seeks to increase the amount of profit it can earn from customers.
The world is going to print fewer and fewer pages now that employees are working both in the office and at home, so getting a bigger “share of wallet”, as technical managers often call it, is a priority for print providers.
According to IDC, some 2.8 trillion pages were printed in 2020, down 14% year-on-year (or 450 million fewer sheets), but that could recover to some extent.
“Office print volume will be about 80% of what we expected before the pandemic began,” HP CEO Enrique Lores told attendees of the 50th annual Technology, Media and Telecommunications Conference. from Cowan.
“There is going to be an impact because with fewer people in the offices, there will be fewer pages printed in the office,” he added.
This 80% is subject to change and could be revised downwards. It is unclear how many people will return to their offices and how often they will.
HP changed course in 2020 to rebalance profitability between printing equipment and supplies following a decline in its results and a proliferation of consumables remanufacturers. Ink was traditionally where HP made the lion’s share of its profits.
Lores told the conference that HP had “lost money with almost 25% of our customers.”
The solution? He raised the initial price of hardware for customers who did not want to use HP-branded supplies, and created printers that blocked non-HP supplies, meaning users could not load off-brand toner. This is known as HP+ and gives customers one of two options across the portfolio.
The strong promotion of subscriptions has increased the installed base of Instant Ink customers to 11 million worldwide, up from 8 million 18 months ago. Lores said he considers Instant Ink “one of the most exciting and rewarding things from an investor perspective.”
He added: “[W]hen we move customers to the Instant Ink model, the subscription model…we make more money per customer. It is also a better value proposition for the customer. So it’s a win-win for both. And we ensure that this customer always uses HP supplies. So really, our goal is to transition as many consumers as possible to the subscription model.”
Between 20-30% of new customers purchase printing this way, but HP would like that number to be closer to 50-60%.
“It’s very critical,” Lores added, “not only because of the impact it has on the print industry, but also because it…makes more money per customer, also because it is now a platform to sell additional services.”
And these services? A new one was tested last quarter.
“We are now testing the paper delivery service to these customers, which is another key value proposition because if you print from home, you have to go and buy paper [is] heavy, very painful, and we will deliver it.”
He added, “And that’s just one example of additional services that we’ll be creating on top of the platform. And for each service, we’ll be increasing the amount of money we make per customer.”
HP said this will scale in the coming months.
The register asked HP for more details about the pilot, including where it’s taking place, what other services HP is preparing, and where the paper is coming from.
Readers may wonder if HP paper is competitive with market prices. The cost of printing ink from all branded vendors is not cheap, costing an average of 286% more than third-party alternatives. ®