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

Issue #0611/1 - At 20ppm and 26ppm, the new E120n and E240 would be attractive entry-level mono laser printers if it weren’t for the Cost of Printing with them!

Lexmark has long had a reputation for low purchase price and high running costs. The company recently launched several new printers that amply demonstrate its emphasis on winning customers with a low purchase price only to penalise those customers from that moment on with very high prices on the consumables.

These two new printers fall at the low end of the pricing scale, although with attractive performance, representing an entry level for individuals wanting a laser printer in the home and for use in small companies and offices.

E120n

At 20ppm, the E120n is a nice fast printer for a small printing environment. It is rated for 10,000 pages per month, so there is plenty of capacity for those lower-volume users.

Also unusual is the very fact that this network-ready printer costs only £87 to buy. Lexmark’s customers can normally expect to pay at least £200 for the privilege of having a built-in network interface on higher level mono laser printers (e.g. T640/T640n - £200; T642/T642n - £245; T644/T644n - £250). However, until relatively recently, customers could expect to pay at least £200 for even the most basic integrated network interface from any manufacturer and some do still charge that level of premium.

So, the fact remains – a network laser printer at £87 for the home or small office is impressive.

On this basis, Lexmark’s claim of “High quality printing without the high-quality price” appears to be accurate. This is especially true when one looks at the print speeds of the machines within the price group. Only Lexmark and Epson deliver 20ppm, while all the other competitors deliver either 14ppm or 16ppm.

But, what of the real cost of owning this printer?

In theory, two-piece consumables should reduce the cost of printing but, with Lexmark, there really is no evidence that this is reality!!

Certainly the nominal running cost (toner and drum only) is a rather horrendous 3.10 pence per page. By the time 1,250 pages per month are put through the machine over three years (total 45,000 pages), the user will have bought 23 toner cartridges and one drum. At a cost of almost £60 per 2,000-page toner cartridge, the total cost of printing (including purchase price) rises to 3.31 pence per page.

In fact, the 2,000-page cartridge for a previous Lexmark model, the E210, which includes integrated drum, is actually £3 cheaper (5%) than the toner-only cartridge for the E120n. So, we see Lexmark charging a premium for having no drum!! Users are unlikely to realise what is happening until they reach the 25,000-page mark and suddenly find that they are required to buy the drum at nearly half the price of a toner cartridge.

If the company is reduced to such tactics to improve revenue and profitability, then the company is in more trouble than we might have thought. Lexmark knows that a low-end mono laser printer with network interface at £87 will sell, and probably in large numbers, and that customers will be trapped as soon as they have parted with their cash.

Although the addition of this external network print server would push the total purchase price of an FS-720 up to £157, it would only push the long-term CPP up to 1.27 pence from 1.20 pence (plus 6%).

	Print Speed	Purchase Price	Nominal CPP	Long-term CPP
Lexmark E120n	20	£87	3.10 pence	3.31 pence
Brother HL-2030	16	£99	1.86 pence	1.99 pence
Dell 1100	14	£69	1.95 pence	2.12 pence
Epson EPL-6200L	20	£102	2.10 pence	2.30 pence
Hewlett-Packard LaserJet 1020	14	£92	2.70 pence	2.84 pence
Konica Minolta PagePro 1400W	16	£88	2.27 pence	2.48 pence
Kyocera Mita FS-720	16	£122	0.87 pence	1.20 pence
Oki B4100	18	£129	1.37 pence	1.46 pence

Note that for this level of machine, the mixed mono/colour CPP over three years shown in the accompanying table is calculated on the basis of 1,250 pages per month using maximum capacity supplies and takes into account any standard, or starter, supplies shipped with the device and also includes the cost of purchase. All prices are manufacturer’s recommended prices.

This, in turn, would mean that the cost of running a Lexmark E120n for three years would still be a massive 161% higher than running the networked FS-720 as opposed to 176% higher than running the basic FS-720.

E240/n

Where Lexmark’s new E240 is concerned, we see a very similar situation. The E240 is a basic, functional mono laser printer with 26ppm capability and no network interface on the base model. A network model is available at a minimal £35 premium.

In addition, the machine has a 250-sheet input tray, typical of the printer level, and options on the base model include network interface and 550-sheet additional paper tray.

	Print Speed	Purchase Price	Nominal CPP	Long-term CPP
Lexmark E240	26	£114	2.74 pence	2.94 pence
Brother HL-5140	20	£199	1.31 pence	1.55 pence
Dell 1710	26	£115	1.24 pence	1.41 pence
Hewlett-Packard LaserJet 1320	21	£226	1.68 pence	2.10 pence
Konica Minolta PagePro 1350W	20	£135	1.57 pence	1.75 pence
Kyocera Mita FS-1020D	20	£212	0.68 pence	1.03 pence
Oki B4250	22	£169	1.37 pence	1.62 pence

Note that for this level of machine, the mixed mono/colour CPP over three years shown in the accompanying table is calculated on the basis of 1,500 pages per month using maximum capacity supplies and takes into account any standard, or starter, supplies shipped with the device and also includes the cost of purchase. All prices are manufacturer’s recommended prices.

Both nominal CPP and long-term CPP on Lexmark’s E240 are considerably higher than all of the competition.

With this model, we see a nominal CPP that is 63% higher than the closest competition (Hewlett-Packard LaserJet 1320) and a huge 3x the cost of the Kyocera Mita FS-1020D.

When purchase price and length of service are taken into account, the long term CPP of the Lexmark model is a ‘mere’ 40% higher than the LaserJet 1320 and 185% higher than the Kyocera Mita FS-1020D that not only costs almost twice as much to buy but offers users duplex printing as standard – thus offering users an additional opportunity to save money on their printing.

Six pages per minute extra print speed on the E240 is just not worth the hugely expensive running costs whereas the duplex capability of the FS-1020D is certainly worth the additional purchase cost.

	Purchase price	Long term CPP @ 100 pages/month	Long term CPP @ 500 pages/month	Long term CPP @1,250 pages/month
Lexmark E120n	£87	5.74 pence	3.47 pence	3.31 pence
Brother HL-2030	£99	3.72 pence	2.22 pence	1.99 pence
Dell 1100	£69	3.69 pence	2.26 pence	2.12 pence
Epson EPL-6200L	£102	4.35 pence	2.39 pence	2.30 pence
Hewlett-Packard LaserJet 1020	£92	4.06 pence	3.21 pence	2.84 pence
Konica Minolta PagePro 1400W	£88	4.67 pence	2.49 pence	2.48 pence
Kyocera Mita FS-720	£122	4.83 pence	1.54 pence	1.20 pence
Oki B4100	£129	4.22 pence	1.61 pence	1.46 pence

Long-term CPP over 3 years

One might imagine that the paramount decision-making criterion in a printer purchase should be the number of pages to be printed. It would be fair to assume that this would change the recommendation of brand and model of printer for the environment considerably.

However, taking the Lexmark E120n as an example, if a home user were to buy the machine to print only 100 pages per month rather than 1,250 pages, the balance of costs would change but the Lexmark would still be the most expensive.

Instead of needing to buy 23 toner cartridges and one drum unit over three years of ownership, the user would need to buy only 2 toners and there would be plenty of life left in the drum unit. But, the Cost Per Page over the three years would rise to 5.74 pence – still the highest in the group by 19%.

What is perhaps surprising is to note that the second most expensive machine in this category at 100 pages per month is Kyocera Mita’s FS-720.

This just emphasises the fact that Lexmark’s E120n is a massively expensive proposition for any print environment, regardless of print volume. The FS-720 should be more expensive than most of the printers in the group at low usage levels because the purchase price is comparatively high. But for it not to rise above the Lexmark is just extraordinary.

What is interesting to note from the accompanying chart is that the positioning does not change even when the volume printed per month drops to 500 pages. However, when the volume drops right down to 100 pages per month, there is a dramatic change in which printer is the most economical.

No longer is the Hewlett-Packard the second most expensive printer to own but its costs exceed the Dell and Brother machines by only a small amount. And, it is these two machines that vie for the position as most economical printer having sat in the middle of the pack at higher print volumes.

But, as we have already noted, the Lexmark E120n maintains its position as worst printer for the money by a large margin and the same goes for the E240.

At this point in time though, the major buyers for these printers are largely those that are likely to have little or no knowledge and understanding of the dynamics behind the Total Cost of Printing principle. This means that the brand name and the purchase price are the most important factors to them in their purchasing decision.

What is most concerning is that, having pushed the cost of printing so high at the low end, Lexmark may push costs up at the upper end as well.

It is at the point where the high costs seriously impinge on the corporate market place, where TCP has a much higher profile, that things could begin to go seriously wrong for Lexmark—if it hasn’t already

However, we have to come to the conclusion that Lexmark is becoming less and less the brand of value.

~End~

This entry was posted on Wednesday, April 5th, 2006 at 12:03 am and is filed under New Products, Hardware, Pricing, Comparisons, Financials, Issues. 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.