Xerox Lowers Cost Of Color Printing For High-Volume Users

The company turns the traditional printer pricing model upside down, by charging more for hardware and less for ink.
Xerox on Monday introduced a new printer that offers color for the same cost as black and white, giving high-volume users the option of paying more for hardware in exchange for a lower cost of printing throughout the life of the product.

The move could potentially change how printers are sold to business, because it gives customers more options in selecting the printer that best fits their needs, experts say. Up until recently, the industry followed a strategy of making higher profits through the life of the printer by offering inexpensive hardware, but selling ink at a high cost.

Xerox deviates from that strategy with the Phaser 8860 printer, which also is available in a multifunction version that combines a printer, scanner, and copier. The printer uses a "solid-ink" stick that's totally consumed, leaving nothing to throw away -- a feature Xerox claims is more environmentally friendly than comparable laser printers with toner cartridges.

The black ink stick costs $216, and three color sticks -- magenta, cyan, and yellow -- cost $72 apiece. Each stick -- whether color or black -- prints 14,000 pages. Printing speed is as fast as 30 pages per minute.

While the 8860's lowest price is about $900 more than competitors' comparable products, printing over the lifetime of the printer can be half as expensive, depending on the amount of color an organization prints, according to Xerox. The hardware is designed for businesses with print volumes between 1,000 and 10,000 pages per month, such as real estate agencies, marketing firms, design agencies, and contractors.

"It is definitely a game-changing pricing strategy for printers, because now you are really profiling your customers," Philip Grote, analyst for Current Analysis, told InformationWeek. Where a high-volume user who prints a lot of color may find the 8860 attractive, a user that prints mostly in black may still want to pay less for the hardware. The benefit in Xerox's strategy is the option to choose.

"This reflects the total market's growing sensitivity to total cost of ownership and cost-of-page consideration," Grote said. "Before this, they really just looked at the hardware."

Eastman Kodak, for example, in February launched a consumer line of inkjet printers that uses cartridges selling for $10 for black ink and $15 for a five-ink color cartridge. The latter is considerably less than competitors' offerings.

Xerox's latest strategy isn't expected to topple Hewlett-Packard from its perch as the leading printer maker. "It will help (Xerox) sustain market share, and could help them take a bite out of the leader," Grote said. "But it won't shift the market share overall. HP will remain the leader."

Xerox, however, could help push the industry further along the path to increased cost-of-printing options. The challenge for Xerox will be in training sales staff in helping customers choose the pricing model that best fits their needs, Grote said.

Pricing for the 8860 and the 8860 multifunction printer starts at $2,499 and $3,999, respectively. The former is available now, and the latter in November.

Xerox on Monday also introduced three other printers which follow more traditional pricing models. The Phaser 6180 multifunction printer starts at $999 and prints color at 20 pages per minute, and black at 31 pages per minute. The company also introduced two entry-level multifunction printers for workgroups. The WorkCentre 7232 and 7242 are for "color-cautious" organizations that print mostly in black, but need the option of color. Pricing starts at $5,299 for the 7232 and $6,299 for the 7242. The 6180 is available today. Xerox and partners will start taking orders for the 7242 in November and the 7232 in January.

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