HP Print Rental Service Seeks More Users To Become Subscription Addicts

HP has 13 million customers signed up to the Instant Ink subscription program, and a recently introduced rental service that includes hardware is similarly forecast to extract "more value" from customers.

The All-in-One service opened for business in the US last week. Unlike Instant Ink, it includes hardware as well, specifically the HP Envy or HP OfficeJet models, for a monthly fee based on a printed page plan. The contract runs for two years, and cancellation fees apply.

Speaking at the Morgan Stanley Technology, Media and Telecom conference this week, HP CEO Enrique Lores talked of the progress at HP since a strategy rethink in 2019 to protect supplies revenue by upping subscription services, selling hardware loaded with ink, smart models, and charging more for printers when a customer isn't committing to HP ink.

"We have made a lot of progress with HP plans, which helps us to secure a share of supplies," the CEO told attendees. "We have also made good progress with technology and innovation, improving our share of supplies, both in ink and in toner. We have also grown our share and expanded our portfolio in big tank.

"Last but not least, we have given a significant shift of our business to a subscription model. We have more than 13 million subscribers now, and these are people that pay us every month to print."

Print paper home delivery was added to Instant Ink last year, which Lores said is "great for customers because of convenience, it's great for us because it's more margin per customer." It's "not cheap paper, it's convenient paper."

On the latest addition to the ever-expanding subscription portfolio, Lores said customers in the program "can pay a bit more and get a new printer with 24/7 support, with a technology upgrade path which is really helping us to continue to expand into this [subscription] space."

HP has run a marketing campaign in recent months about helping people to dislike printing less, and Lores told the Morgan Stanley conference that "reducing digital friction" is an "important driver of growth."

Lest we forget, growth is what all of this is about. It's not a dirty word and neither is profit. Some, however, find it easy to be cynical about HP's supplies business, the cash cow of the organization. The old trope was that print ink was comparable in price per ml to expensive Champagne or perfume.

It remains the biggest margin generator for HP, more so since a strategy rethink in 2019. Printing operating margin of 15.6 percent in Q4 2019 had grown to 18.9 percent in Q4 2023 ended October 31. Cost-cutting helped, as did efforts to expunge unprofitable customers. The printing group made $200 million more in HP's fiscal 2023.

"Profit upfront and HP+ enabled printers now represent 60 percent of our unit shipments and our share in big tanks in up to 18 percent worldwide," said Tuan Tran, boss of HP's Printing Group, at the company's Securities Analyst Meeting in October.

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"When we move our transactional customers to a digital relationship, adding supplies and paper, we believe that we can increase the lifetime value by over 20 percent," he added.

"When they choose these convenient all-in plans we expect to achieve a lift of roughly 50 percent or more driven by improved printer mix, 100 percent supplies connect and support connect and lower churn. We intend to shift more of our install base to subscription and expect to increase the total subscribers across Instant Ink and HP all-in plans by 25 percent in FY 2026. So that's all exciting."

HP has made no bones of locking customers into any of its multiple subscriptions and there is no reason to suggest change ahead. Back at the Morgan Stanley conference, Lores echoed Tran's comment.

"Over time, we will integrate more parts of our portfolio as part of the subscription, but it is clearly a differentiated asset, a platform that we can use now to offer additional services as we did with paper, and an important way to be able to capture more value over time per customer."

As for the All-in-One service, the entry-level plan starts with the HP ENVY at $6.99 per month for 20 pages, right up to the HP OfficeJet Pro that lets business customers print 700 pages a month for $35.99.

If monthly printing exceeds the monthly plan, customers can keep on printing and HP's website states that "additional sets of 10-15 pages will be automatically added to your monthly invoice at $1 per set."

If a customer prints fewer pages than paid for each month, the unused allocation can be rolled over to the following month. Up to 300 pages can be rolled over.

The printer phones homes when ink is getting lower and new supplies are sent when required. If the printer breaks, next business day replacement is offered – dependent on region [PDF] – for warranty issues but obviously accidental damage isn't included.

Don't want to see through the two-year contract? Early cancellation fees apply of up to $270 for the top-end option. There's a reason we refer to the company as HP Ink. ®