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HP Introduces All-In Printer Subscription | April 2024

Published Date
Author OC Ferrell

Subscriptions have become incredibly common with digital products, but a subscription-based pricing model is popular across various products, including software, media streaming, online tools, gym memberships, and even physical goods. The Hewlett-Packard Company (HP), a technology company, is interested in making printing a subscription.

Subscription Pricing

With subscription pricing, customers pay a recurring fee, typically monthly or annually, in exchange for access to a product or service. Instead of making a one-time purchase, customers enter into a subscription agreement that allows them to continuously use the product or service as long as they maintain their subscription.

Subscription Printers

HP earns $18 billion from printers and ink cartridges annually, but as the world becomes more and more digital, printer sales have declined. Additionally, HP makes far more money selling printing supplies such as ink than it does selling printers, so the company loses money on its investment when consumers use third-party ink. HP uses a loss leader pricing strategy, which means they sometimes sell printers at a loss, knowing they will bring in more money over time via ink sales. HP faces a class action lawsuit for disabling some printers when third-party ink was used.

In response to these challenges, HP wants to turn printers into a subscription. The company introduced the HP All-In plan, a monthly printing subscription that provides subscribers with a new printer, automatic ink delivery, and live support.

Subscribers can choose from one of three printers, a basic model, a mid-grade model, or an office-grade model. Then, subscribers select a monthly printing allowance (from 20 to 700 pages per month). Depending on the selections made, subscriptions range from $6.99 per month to $35.99 per month. Subscribers face a cancellation fee if they cancel after the first 30 days but within the first two years. If the subscriber continues after two years, they get the option to receive an upgraded printer.

Before the All-In plan, HP only offered an ink subscription.

Pros and Cons

HP believes turning printers into a subscription product could effectively address several paint points of printer ownership. For example, replacing ink can be costly and inconvenient. Consumers can potentially save money, depending on their print volume, while having ink automatically shipped to them before they even run out. Also, access to 24/7 support may be appealing to less tech-savvy users. On the flip side, consumers could have privacy concerns since subscribers are required to keep their printer connected to the internet so HP can monitor ink levels and printed page count. HP also says in its privacy policy that, unless users opt out of sharing personal data, it sends information about you to its advertising partners for targeted advertising.

One risk to this pricing model is customer churn. Customer churn in subscriptions is when subscribers cancel the service. In HP’s case, the company does not charge subscribers an upfront fee beyond the monthly fee, and customers can cancel within 30 days. The trial period is meant to reduce the perceived risk for customers and increase their confidence in making the purchase decision. However, if customer churn is high, HP could end up spending money on reverse logistics issues, such as offering prepaid return shipping labels and managing used inventory.

HP is confident churn will not be an issue because in a pilot of the subscription program, less than 10 percent of users canceled. HP’s ultimate goal is to make printing as easy as possible.

In the Classroom

This article can be used to discuss pricing strategy (Chapter 12: Dimensions of Marketing Strategy).

Discussion Questions

  1. Describe the subscription-based pricing model and why it has become increasingly popular.
  2. What factors might influence a consumer's decision to subscribe to HP's All-In plan?
  3. What is customer churn and in what ways could it be costly for HP?

This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.

Sources

Brody Ford, "HP Is Turning Printers Into a Subscription," Bloomberg, March 20, 2024, https://www.bloomberg.com/news/newsletters/2024-03-20/hp-wants-you-to-rent-your-next-printer-for-a-monthly-fee

HP, "HP All-In Plan FAQs," https://www.hp.com/us-en/all-in-plan/faq.html  

Michael Crider, "HP CEO Says the Quiet Part Out Loud: ‘Make Printing a Subscription’," PC World, January 24, 2024, https://www.pcworld.com/article/2216875/hp-ceo-says-the-quiet-part-out-loud-make-printing-a-subscription.html

Scharon Harding, "HP Wants You to Pay up to $36/Month to Rent a Printer That It Monitors," Ars Technica, February 29, 2024, https://arstechnica.com/gadgets/2024/02/hp-wants-you-to-pay-up-to-36-month-to-rent-a-printer-that-it-monitors/

About the Author

O.C. Ferrell is the James T. Pursell Sr. Eminent Scholar in Ethics and Director of the Center for Ethical Organizational Cultures in the Raymond J. Harbert College of Business, Auburn University. He was formerly Distinguished Professor of Leadership and Business Ethics at Belmont University and University Distinguished Professor at the University of New Mexico. He has also been on the faculties of the University of Wyoming, Colorado State University, University of Memphis, Texas A&M University, Illinois State University, and Southern Illinois University. He received his Ph.D. in marketing from Louisiana State University.

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