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

Issue #0533/1 - Lexmark’s C510 users are hardest hit with another round of pricing increases that pushes Total Cost of Printing yet higher.

Lexmark has, yet again, made price adjustments to the majority of its consumables products, such that the average increase is more than 3%.

Lexmark C510n

But, with price increases as high as 32%, there has to be serious concern for customers who own the products concerned and for the message that Lexmark is giving out. This has all the appearance of being a case of ‘biting the hand that feeds you’, not to mention ‘Simon Says’ (see TCPglobal Issue#0532 - "Are we playing ‘Simon Says’ in the printer industry?")!

It is the C510 four-pass colour laser printer that draws this extraordinarily high level of attention, with the price of the mono cartridge being increased by 27.7% and each of the colour cartridges increased by 32.3%.

Bearing in mind that Lexmark has just launched two low cost single-pass colour laser printers (to be reviewed in next week’s TCPglobal), it seems quite clear where Lexmark expects colour printing to be heading. Although the C510 is still a current model, with no known announcement as to its withdrawal, the implications of this pricing move is that the machine will not survive much longer but will give way to single-pass technology.

As a result, the company is attempting to extract maximum profit in the dying days of what could almost already be considered to be the legacy C510.

In order to ensure continued sales up to the desired time of withdrawal, Lexmark has needed to reduce the purchase price of the printer. The base level, un-networked C510 has already been removed from the line-up and the price of the network-ready model dropped by a huge 40% - almost to the level of the former base model.

Such a massive price reduction has necessitated complete withdrawal of the base model, rather than a price reduction, because it would have meant dropping the price to an unacceptably low level in order to make room for the desired reduction on the network model.

As other manufacturers have introduced new models and adjusted pricing on existing models (Dell in particular) in recent months, Lexmark’s C510n had suddenly become the most expensive machine in the category at purchase – a position that does not fit Lexmark’s strategy. The company is known for its low cost hardware and high running costs.

Tending to buck that trend, as a player within a competitive grouping, the long-term CPP on the C510n had not actually been uncompetitive originally, despite Lexmark’s reputation for high consumables pricing. Of course, the base level purchase price has always helped the situation by being very low.

So, despite a reduction of 40% on the price of the hardware, bringing the purchase price back to the middle of the pack, the excruciatingly high price hike on the consumables means that the long-term CPP has risen by 15% – pushing it almost right to the top of the group.

In comparison to its competitors, this model is now looking very unattractive to potential buyers. What Lexmark is relying on is that buyers will look no further than the purchase price and, seeing a competitive price from a company with a big name, literally look no further.

This emphasises just how important it is for buyers to make the proper investigations before committing to any printer hardware.

On the more general level, Lexmark’s price adjustments have resulted in average price increases of just 4.7% on consumables for the colour laser printers.

Prices have mostly been adjusted within a range of 2.8% to 7% but the toner and associated products just for the C910 and C912 have been reduced by around 2%.

Similarly, mono laser consumables have been increased by an average of 3% but ranging from a highest increase of nearly 11% to several minor reductions of 2%.

These reductions are on Lexmark’s range of Linea compatible mono cartridges for Hewlett-Packard legacy printers. The 11% increases are repeat increases on toner supplies for a couple of Lexmark’s own legacy printers, the 3900 and 3875.

While Lexmark has been making these increases, Dell has reduced the price on its mono toner for the 3000cn, making the model even more competitive!

~End~

This entry was posted on Friday, October 28th, 2005 at 12:03 am and is filed under Pricing, Hardware, Comparisons, Financials, Issues, News, Total Cost of Printing. 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.