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HP CFO Marie Myers has revealed (via The Register) the impact moving customers from transactional-only to subscription-based models has had on business growth.
According to Myers, the company’s customers are around 20% more valuable when they subscribe to a service like Instant Ink, as they’re more likely to stay loyal for longer.
More broadly, tech firms have been under increasing pressure from antitrust bodies over measures and service terms that lock customers in and make it hard for them to leave, which puts a question mark over the long-term sustainability and profitability of its subscriptions.
HP subscriptions debate
Myers is reported to have said: “We absolutely see when you move a customer from that pure transactional model … whether it’s Instant Ink, plus adding on that paper, we sort of see a 20% uplift on the value of that customer because you’re locking that person, committing to a longer-term relationship.”
HP’s ink subscription plans range from $0.99 per month for 10 pages, to $24.99 per month for 700 pages. There are also toner plans, ranging from $1.99 to $19.99 per month, which are cheaper per page.
The subscriptions are sold on the basis of convenience – that consumers will automatically receive ink via mail when it’s time to replace an empty cartridge or toner.
In its 2023 fiscal year-end report, HP noted that consumer subscriptions, including Instant Ink and other consumer subscriptions and consumer digital services, had seen considerable growth.
Still, the company’s consumer printing business declined by an alarming 18% in the twelve months leading to October 31, 2023, which is indicative of a sector suffering from environmental and sustainability pressures.
TechRadar Pro has contacted HP for comment.
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