HP Boasts About The Success Of Its Strategy To Lock In Print Customers

HP Inc. (NYSE:HPQ) CFO Marie Myers boasted about the company’s subscription-based model that locks in print customers, crediting it for improved margins.

What Happened: HP has been using customer lock-ins via subscription models to turn unprofitable sectors of its business into revenue-generating streams, reported The Register.

The company’s Instant Ink subscription service, which supplies ink or toner cartridges as required, has amassed over 11 million subscribers as of the previous year. Myers highlighted the financial benefit of transitioning a customer from a transactional to a subscription model, which can augment the customer’s value by 20%.

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Myers made these comments while speaking at the UBS Global Technology conference. She emphasized that HP’s focus on shifting customers to a subscription model is a crucial aspect of its strategy to enhance its bottom line in an era with fewer printed pages. HP’s Printing division’s margin has increased from 14.8% in fiscal 2020 to 18.9% in fiscal 2023.

The company’s lucrative subscription model, coupled with new subscriptions and the introduction of Smart Tank hardware pre-filled with a specific quantity of ink/toner, now represents 60% of total shipments.

Why It Matters: HP’s successful transition to a subscription-based model represents a strategic move in the face of declining global print volumes.

The company’s ability to increase customer value by 20% through this transition enhances its bottom line and signifies a shift in its business model that could set a precedent for other tech companies facing similar industry challenges.

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