TCPglobal - news, views and issues on total cost of printing

Issue #0701/2 - Quite a surprise to find the Hewlett-Packard LaserJet 1018 in the position of the lowest, or nearly lowest, priced laser printer on the market (2nd in the US, 4th in parts of Europe)! Certainly representing a superb opportunity for those in the market for a mono laser printer, we take a look at the pricing of the LaserJet 1018 and compare it with other printers from Hewlett-Packard.

Over the past few years, whenever we’ve been looking for the cheapest mono laser printer possible, we’ve always looked in the direction of the low-end Samsung products. Right at the moment, however, that would lead us astray – because the cheapest machine in stores now is not a Samsung, it is a Hewlett-Packard!

This is most unusual bearing in mind that Hewlett-Packard’s historical strategy has not been to lead on price but to lead on quality and perceived value – or the ‘value proposition’ as it is termed.

We cannot even say that it is channel discounting that has caused this situation to arise. Although Hewlett-Packard has not changed the RRP of the product (LaserJet 1018), the price published on its own web site for direct sales to customers is a massive 47% lower than the published RRP.

In fact, the lowest price found in the channel is a mere 2.4% lower than Hewlett-Packard’s own price. This has to mean that, even though the RRP has not been reduced, the price to distributors and dealers must have been reduced – but probably not by such a high percentage.

Hewlett-Packard LaserJet 1018

Where we see the difference in strategy between the manufacturer and the channel showing itself is in the pricing of the consumables for the LaserJet 1018.

Whereas Hewlett-Packard is selling the toner cartridge through its direct-sell web site at the same price as its published MRSP (Manufacturers Recommended Selling Price), discounting as high as 23% can be found in the channel.

So, we have to ask ourselves the question, “Is the LaserJet 1018 now fantastic value for money …?”

There is no doubt that if the goal is merely to acquire a mono laser printer at the lowest price imaginable, then the answer has to be ‘yes, absolutely’.

What we should be doing is extending the question with the phrase, “… or are we being led into a trap that will result in the LaserJet 1018 being bought for environments where it is very poor value for money and, quite possible, inappropriate?”

In reality, the answer is never perfectly straightforward (as always) but depends on how users and buyers are looking at their needs and what motivation there may be for seriously considering any particular model:

• Practicality?
• Oooh! a laser for less than £50 / €85 / $100?

This pricing is sure to attract users with little money to spare. Let’s face it, at less than £50, the LaserJet 1018 has become little more than a disposable commodity that could be placed on every desk in a corporation if it was thought that it could improve efficiency and productivity.

So, lets start off by looking at the pricing a little more closely. We’ve already identified that the hardware selling price, even from Hewlett-Packard, is heavily discounted from the published list price. What we should also note is that the selling price is exactly the same as the price for Hewlett-Packard’s lowest cost inkjet printer, DeskJet D2360!

When considering which to buy, the immediate reaction and perceived value would fall in favour of the laser printer – and why not when we consider what we used to have to pay for a laser printer and the fact that low-end inkjet printers are still slow to print?

But is this the right reaction and decision?

Producing 2,000 pages, and with an RRP of £51.99 (all prices quoted as including tax), the Q2612A toner cartridge is Hewlett-Packard’s most expensive toner unit – and has been for at least three years. But, at least the price for the toner unit is 44% lower than the published RRP for the hardware.

Hewlett-Packard LaserJet 1018Cost of Printing

Cost of Printing

However, by the time we consider the price that we hope to pay for the items, we only have to look as far as Hewlett-Packard itself to find out that we could easily end up paying more than 5% more for each and every toner cartridge we buy than we did for the printer itself.

No guarantees to be 100% accurate here, but – we have been familiar with the cost of sets of inkjet cartridges costing more than the corresponding hardware for several years but I believe this is probably the first instance where mono toner cartridges are costing more than the hardware.

You’ll probably be pleased to know, though, that the toner cartridge can be bought for as little as £39.89, so you should be able to avoid paying more for the cartridge than the machine unless you buy direct from Hewlett-Packard.

With a nominal Cost Per Page of 2.6 pence from Hewlett-Packard, and 1.99 pence at lowest street price, this proves to be up to 68% lower than the nominal CPP of the No.21 ink cartridge for the DeskJet D2360!

So, the buying decision made on the basis of looking for a mono printer has to be in favour of the laser printer. There is absolutely no way the inkjet can compete on Total Cost of Printing with the LaserJet 1018 regardless of print volume.

We should, however, not leave it there because we can still beat that long term CPP without going outside the Hewlett-Packard printer family.

At 12ppm, the LaserJet 1018 is very definitely at the bottom end of the laser printer speed range but, what if we were to climb the ladder a little and go for the first LaserJet printer up the range that does not use the Q2612A toner cartridge.

This is the LaserJet P2015 with a massive print speed jump to 26ppm and a published RRP of £224, including tax. This machine can be bought for £189 (15.6% discount) in the channel, so it is nearly three-times the cost of the LaserJet 1018 but has a nominal CPP of just 1.13 pence at street price (87% lower than the LJ 1018).

What this means is that, even though the LaserJet P2015 would be twice as expensive to run for three years if the print volume was as low as 100 pages per month (using the high capacity toner cartridge), the volume has to rise only to 250 pages per month and the long-term CPP becomes competitive.

One climb further and, for busy small offices, the long-term CPP becomes an attractive 24% lower at a print volume of 1,000 pages per month and the users benefit from the much higher print speed.

Therefore, for a significant print volume, avoid the LaserJet 1018, even a this special price, and set your sights a little higher at the LaserJet P2015.

But is this where the story ends? Not in my opinion!

Right in the middle lies a printer that I have mentioned on a number of occasions because it is largely ignored despite the fact that it represents exceptional value for money at the lower end of the market.

This is the OfficeJet Pro K550 colour business inkjet printer – with a RRP of £159.80, including tax, but available on the street for a purchase price of just £104.

Yes, it is more than twice the cost of the LaserJet 1018 and, yes, it has six consumable items to be changed instead of just one, but look at the value proposition!

Print speed is 12ppm in normal print mode (37ppm in draft), so equivalent to the LaserJet 1018, and it will print colour pages at 10ppm in normal mode. On top of this, its nominal mono CPP is a miserly 1.11 pence – lower even that the LaserJet P2015.

This puts the OfficeJet Pro K550 firmly in the lead for value for money at the low end of the mono market, with the added bonus that it will print colour pages (including photographs) when required, at a long-term CPP that beats all the other machines, even at a low 100 pages per month print volume.

Hewlett-Packard Printers

Low Volume Mono Printing

By the time we look at printing 250 pages per month, the K550 offers a 36% cost advantage over both laser printers and, at 1,000 pages per day, the overall saving rises to more than 50%. [Note: above 1,000 pages per month, the K850 should be considered, with its A3 print format and higher duty cycle – although its print speed is lower]

So, in terms of economics and the fundamental value proposition, the OfficeJet Pro K550 still cannot be beaten as a low level business printer.

Where the choice of printer may justifiably take the buyer to the laser printer as the preferred option is where print volume is very low (100 pages per month) but where the nature of laser printing is more suited to the usage of the page.

In particular, we might consider this to include very small companies where hard copy is not a primary function, being largely focussed on the printing of a few invoices and letters, memos or reports each week.

At this level, the higher-priced laser printer (P2015) is unjustifiably expensive both to buy and to run, while the business inkjet printer offers little long-term cost benefit and has a significantly higher purchase price.

So, what we have is an exceptional opportunity for a proportion of the market to take advantage of this pricing while it lasts. One has to suspect that the model is due to be discontinued and the company is moving excess stocks before a new model is introduced. However, this is speculation rather than knowledge but would explain the static RRP, with very low sale price, and the fact that this is the only model of the LJ1000 series that is affected.

In these circumstances, it is a case of making hay while the sun shines - simply because the opportunity may not be there for long.

All prices include tax	LaserJet 1018	DeskJet D2360		LaserJet P2015	OfficeJet Pro K550
Cheapest machine:
RRP	£92.83	£49.35		£224.42	£159.80
HP web	£49.35	£49.35		£199.74	£129.00
Low Street	£48.16	£44.51		£189.05	£104.00
Cartridges:	No.12A	No.21	No.22	No.53X	Bk	C/M/Y	Hd.
RRP	£51.99	£9.99	£11.99	£109.99	£23.99	£16.99	£36.99
HP web	£51.99	£9.99	£11.99	£109.99	£23.99	£16.99	£36.99
Low Street	£39.89	£8.49	£9.49	£79.10	£17.99	£13.79	£29.99
Nominal CPP – mono:
MRSP	£2.60	£6.66		£1.57	£1.11
HP web	£2.60	£6.66		£1.57	£1.11
Low Street	£1.99	£6.33		£1.13	£1.11
Long-term CPP over 3 years – mono, 100 pages per month
RRP/MRSP	£5.47	£8.03		£9.29	£5.11
HP web	£4.26	£8.03		£8.60	£4.08
Low Street	£3.55	£6.90		£7.45	£3.39
Long-term CPP over 3 years – mono, 250 pages per month
RRP/MRSP	£3.92	£7.21		£3.72	£2.58
HP web	£3.44	£7.21		£3.44	£2.03
Low Street	£2.75	£6.15		£2.98	£1.76
Long-term CPP over 3 years – mono, 1000 pages per month
RRP/MRSP	£2.86	£6.80		£2.15	£1.44
HP web	£2.74	£6.80		£2.08	£1.11
Low Street	£2.13	£5.78		£1.62	£1.04

~End~

This entry was posted on Friday, January 12th, 2007 at 12:02 am and is filed under Hardware, Pricing, Comparisons. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.