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

Issue #0737/2 - Most US printer manufacturers are paying lip service to the dramatic weakening of the US Dollar but they are being highly selective in which products are affected most or least.

Reductions in the value of the US Dollar against the Euro and the UK Pound have usually meant that US manufacturers have made adjustments to supplies pricing in the region to reflect the increased value to the manufacturer of the revenue obtained from Europe. This year, a slightly different trend seems to be appearing.

While the US Dollar’s value continues to slide, manufacturers seem reluctant to pass on the full benefit to customers.

After staging a steady recovery of sorts during most of 2005, the US Dollar began its latest relentless slide in about November of 2005 and shows no immediate signs of stopping (or even slowing).

Since November 2005 the Dollar has reduced in value by 21% against the UK pound and 25% against the Euro, making Europe much more expensive to Americans and making it more difficult for European companies to export to the US.

What it should be doing is making goods from the US cheaper to Europeans. Indeed, Christmas shopping in New York comes highly recommended this year.

Where printer consumables are concerned, price reductions have been varied and inconsistent, with some US manufacturers not making any reductions while others make larger reductions on some products than on others.

In other words, pricing adjustments are more strategic than ever, perhaps using currency fluctuations to mask underlying intent. Products that the manufacturers wish to push are being reduced while the gold mines are maintaining steady prices or even seeing their prices raised.

Lexmark’s #32 high capacity
black ink cartridge is 3%
more expensive now than
2 years ago despite a 21%
adjustment in the exchange rate.

Lexmark has, this month, reduced pricing on most of its ink and toner supplies products by an average of 4%. Hewlett-Packard has not made pricing changes since June but they were based around an average of 5.7%.

Moving backwards, Lexmark made some changes in May of this year (average -0.8%) but this followed a significant round of reductions in January 2007 when the average change was -4.6%. Hewlett-Packard’s previous round of reductions was almost a year earlier, in July 2006, when average reductions were just 3.8%.

However, as mentioned earlier, the reductions are inconsistent product to product.

If we look at pricing for a few Lexmark cartridges over the last two years, we quickly find that some products have been reduced by significantly more than the average, as much as 11.1%, while others have only been reduced by about half the average, 4.2%.

What is particularly telling, though, is that some products are more expensive now than they were two years ago – despite the weaker Dollar and despite the price-reduction trend.

As a cartridge, the #32 black is a key one in the Lexmark line-up. It is the black cartridge for a very wide range of printers and All-in-Ones but, more than anything, it is the high capacity option, meaning that it needs replacing less often and provides more economical printing than the cartridge shipped with the printer in the first place.

Black is also the ink that is used most out of all the colours and depended on most.

Probably to try and encourage users to print more colour documents, the tricolour companion, the #33, has been reduced in price but only a little compared to the average reduction over the whole range and particularly when compared to some of the toner cartridges.

What we are seeing is Lexmark penalising inkjet customers who want to practice economical purchasing and printing on their low print volumes, trying to push them to the cheaper but less cost-effective low capacity cartridges.

Over recent years we have seen the amount of ink contained in inkjet cartridges from several manufacturers steadily fall, to the point where the latest Lexmark devices ship with an incredibly stingy 3ml of usable colour ink in the tricolour cartridge – and yes, that means only 1ml of each colour!! The fact that Lexmark actually sells these cartridges as aftermarket replenishment supplies for the printers is tantamount to daylight robbery and is an insult to its customer base.

In fact, as little as half of the foam that holds the ink inside the cartridge has even come into contact with ink. The rest is untouched. This cartridge is capable, realistically, of holding 18-20ml of ink. I physically injected 24ml of liquid (water - not ink!!) into the cartridge before there was any sign of the cartridge being overfilled.

With 6ml of black ink, the black cartridge is a little better but still ensures that almost any Lexmark printer will end its life having been the most expensive on the market, despite its rock-bottom purchase price.

Hewlett-Packard’s low-capacity cartridges look almost lush by comparison, with about 5ml of colour ink in the tricolour cartridge and around 7ml of black. But, even these compare miserably against the individual inks supplied by Brother and Epson where around 5ml of EACH colour ink is available to the user. Brother, however, tops the bill with 13ml of black ink available to the user in comparison to just 7ml from Epson.

[All individual ink tanks leave a small amount of ink inside the cartridge to avoid any danger of introducing air into the fixed-head ink system. This ink is inaccessible to the user.]

Dismantled Lexmark ink cartridge

Needless to say, there are corresponding benefits to the user from these higher capacity systems than with the ultra low capacity systems when Cost of Printing is calculated!

In Hewlett-Packard’s pricing, we see a similar story to Lexmark’s. The high capacity HP339 black ink cartridge has not been reduced at all in the last two years while the HP343 tricolour ink cartridge has been reduced by significantly less than the average. On the other hand, the high capacity black toner cartridge for some of the popular business laser printers has been reduced by a fraction above average.

One comment that we should make here is that Hewlett-Packard has modified its pricing process to avoid the pendulum scenario of several years ago when prices were swinging backwards and forwards on a monthly basis. The downside is that this could become an excuse not to change prices when currency fluctuations suggest they should be changed.

Xerox, the other major US printer manufacturer, has followed the same principle of reducing some prices significantly ahead of the average while holding key products back in order to maximise revenue.

Interestingly, Dell, as a printer ‘marque’ more than a manufacturer (because it doesn’t own any printing technology), behaves in a very different manner altogether – one that smacks either of a touch of arrogance or a belief that supplies will sell whatever the price as long as the hardware purchase price is low enough.

Dell cartridge prices have not changed

Dell has not made any changes to pricing of supplies at all over the two years.

With the UK’s exchange rate against the US Dollar having moved by 21% over the last two years, Xerox’s 13% reduction on its mono laser toner seems generous. The more typical 8% to 11% reduction seen on other toner products is acceptable in view of the fact that most supplies sold in Europe by these manufacturers are actually manufactured in Europe (with the exception of Lexmark) and therefore carry European costs of manufacture.

What begins to rankle is when prices have not been changed at all and especially when there has been a price increase at a time when prices to Europeans should be falling.

~End~

This entry was posted on Tuesday, November 20th, 2007 at 12:01 am and is filed under Supplies, Financials, News. 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.