Hewlett Packard / HP and Xerox Raise Prices on Selected Supplies

Hewlett Packard /HP and Xerox recently announced price hikes on selected consumables.

As of April 1, HP will be increasing prices on 67 large-format inkjet supplies by 5%. A letter from HP states that the increases are "part of HP’s normal portfolio management process," which is essentially what the manufacturer says every time it raises prices on products.

Pricing is increasing on the HP 80 ink tanks and print heads, the HP 82 ink tanks, the HP 90 tanks and print heads, the HP 72 ink tanks and print heads, the HP 70 tanks and heads, the HP 82 cartridges, and a handful of other selected SKUs. This latest increase follows a similar pricing action on September 3, when HP increased pricing on over 80 Designjet ink inks by 2.5% to 20%.

Xerox is also raising their prices on selected legacy supplies as of April 1, 2013. Xerox is raising prices on approximately 80 consumables, including toner cartridges and solid ink sticks for Phaser and some WorkCentre printer models that are several years old. The price increases we saw ranged from approximately 2.9% to 5.6%.

Both rounds of price increases are good news for the aftermarket and risky for the OEMs now that high-quality third-party solutions are widely available. Of course, the aftermarket is not immune to pricing pressure of its own. It is generally reluctant to take such pricing actions, however, because of the relentless price competition in this market.

2013 Price Increases Are Narrower, More Targeted

In 2012, almost every printer OEM raised supplies pricing. Hewlett Packard / HP and Lexmark kicked off the charge in December 2011, with announcements that they would each raise supplies prices as of January 1. Where these firms tread, many followed. Many of the price increases were broad, although some OEMs raised prices more sharply on legacy SKUs.

So, when HP and Lexmark closed 2012 by telling partners once again that they would raise consumables prices starting in the new year, we felt a sense of déjà vu and speculated that others would soon follow. Now that appears to be happening.

Thus far, this year’s increases have been more selective. For example, HP raised pricing only on 49 LaserJet accessories and long-life consumables such as fusers. Lexmark’s price increases were broader, affecting its entire lineup of inkjet supplies, with the lone exception of the high-yield 105XL tank. Lexmark’s decision, however, was undoubtedly driven by its decision to exit the inkjet space and its need to capitalize on its failed investment in this business while it still can.

Now, HP and Xerox are increasing selected inkjet cartridges, toner cartridge and ink stick pricing for legacy printers.

OEMs’ profit margins decrease over time on legacy supplies as the installed base of hardware dwindles, demand plummets, and the aftermarket increases its share of the replacement supplies market. Meanwhile economies of scale are harder to maintain and production costs increase as cartridges for legacy products are needed in smaller volumes. It seems that not only OEMs but aftermarket suppliers felt the need to adjust pricing to compensate for flagging margins on supplies for older hardware.

Source: Actionable Intelligence