During an event for investors, HP reports what we usually know but don’t often hear out loud: Instant Ink and similar formulas are attractive to the printer farmer because customers experience a lock-in that keeps them loyal.

Anyone who buys a (HP) printer and links it to a subscription like Instant Ink is essentially tied to the HP locomotive. Printers and ink are connected, so customers remain locked to HP through vendor lock-in. We won’t hear this in so many words at press events, but when the target group of a presentation is investors, it sometimes becomes a little more specific.

Lock in

The Register learned this during a presentation by HP CFO Marie Meyers at the UBS Global Technology conference. “We see that as customers move from a purely transactional model to, for example, Instant Ink, the value of that customer increases by twenty percent. Because you involve the customer and enter into a long-term relationship.”

Lock-in is not necessarily a disaster. While HP convinces customers to commit to the company through a subscription formula, it offers pretty interesting pricing, as we’ve previously examined. The extra comfort is also worth it. There’s something in there for HP, too, and that’s a recurring revenue stream from a customer who would otherwise only purchase ink from a cheap source after purchasing.

Higher margins, but also more sustainable

HP struggled with disappointing results in its printer business for a while, but Instant Ink helped significantly. Around six months ago, HP already had eleven million customers worldwide, which had a positive impact on sales. This is a good result, as the printer market is generally not considered a growth market. In the 2020 financial year, the printing division’s margins were 14.8 percent; today they are 18.9 percent.

Instant Ink has another advantage: HP usually ties the subscription to printers that are slightly more expensive and of better quality. This means an end to the so-called disposable printers, which were sold for 60 euros and replaced a year and a half later. The new devices are more sustainable.