Price war leads to 'disposable printers'

Refills can cost more than a printer, as cheaper hardware sends consumable costs up 15 per cent in a year

The cost per page of home and office printing has risen by 15 per cent in a year because manufacturers have locked themselves into a "suicidal" hardware price war and try to compensate by charging more for consumables, according to the author of a new report on the industry.

The problem, once restricted to inkjets, has spread to laser printers with the advent of low-price consumer models. It has led to the absurdity of the "disposable printer", when buyers conclude that it is cheaper to buy a new model than replace a cartridge.

Philip Grote, a business-printer analyst at Current Analysis , said manufacturers dare not make the true cost of printing transparent because it would cause havoc in the market.

"They do not want to compete on cost-per-page,’ he argued. ‘Even manufacturers with a low cost want to avoid it. They are scared of the reaction they will get."

The confusion is compounded by the fact that printers are sold with less toner or ink than you get with replacement cartridges, obscuring the real start-up cost by 50 per cent or more.

Grote, who is due to publish his report on Friday, cited the Lexmark E120N, which comes with enough toner to print 500 pages, wheras a refill can print 2,000. The practice allows the printer to be sold at a lower price, and the buyer soon needs an expensive refill. This is far from the only example.

It could be justified in the case of inkjets, Grote says, because it suits buyers who do little printing as the cartridges can degrade with time. But this is not the case with laser toner.

The confusion has spread to the enterprise market, where prices have been driven down by competition from consumer printers.

"A model that would once have cost $2,000 can now be bought for a steal…. And where it would once have contained enough toner for 10,000 pages, it now has enough for 6,000."

The true cost of ink and toner is a closely guarded secret – and rightly so, said Grote. Margins are high, but they have to cover development costs, marketing and support for users and retailers.

Manufacturers also face competition from third parties who clone or refill cartridges. There is a big problem with "back door" sales by companies that specialise in making toner or ink cartridges for printer manufacturers and that produce more than they are contracted for.

Big manufacturers such as Hewlett-Packard are the hardest hit because they sell more printers and therefore offer a bigger market for third-party consumables. But the threat comes not only from small firms.

‘Companies including Xerox and IBM offer to service HP printers if you agree to buy consumables from them,’ said Grote.

But the problem is a monster of the printer industry’s own creation, he believes. Manufacturers reckoned they could recoup hardware costs on consumables but forgot that home users need less than businesses.

Pay-per-print schemes from the likes of Oki, Epson, Kyocera, and Xerox are introducing an element of transparency for businesses.

Oki in Germany offers options suitable for small businesses and heavy home users, though you have to sign up for three years and they are not available in the UK.

Prices start at €25 (about £17) a month for 500 mono and 100 colour pages. Each additional colour page costs about 13p for colour and 1p for mono.

Current Analysis says this compares with an industry average of about 6p a colour page, but the Oki prices cover on-site servicing. They also remain the same however much toner you use – a photo uses far more toner than spot colour on a page.

There is talk of bringing pay-per-print further into the home market, but for the moment we are stuck with rising costs and obfuscation. Manufacturers deserve credit for making excellent printers affordable, but they are leaving buyers feeling cheated.

Grote said: "Manufacturers branded as rip-offs will find it hard to regain the trust of customers."