Giving Away the Printer to Sell the Ink Forever
Printer makers sell the hardware cheaply and earn their profit on the ink and toner bought for years afterward. The model works only by locking customers into buying the maker own expensive supplies.
The Classic Razor and Blades
Printer makers sell printers cheaply, sometimes below what they cost to make, because the printer is not where the money is. The profit comes from the ink or toner that customers buy repeatedly over the printer life, often spending far more on supplies than they paid for the printer itself.
This is the classic razor and blades model: sell the durable device cheaply to establish the customer, then earn high margins on the consumable supplies they must buy to keep using it. The printer is a gateway to a stream of high margin ink sales, and the whole model depends on capturing those sales, which requires preventing customers from buying cheaper ink elsewhere.
The printer is nearly a giveaway. The ink is where the profit lives, and the entire business depends on making sure customers buy the maker's ink and not somebody else's.
The Economics of the Model
The model deliberately shifts the profit from the device to the consumable.
| Product | Price vs cost | Role |
|---|---|---|
| Printer | Cheap, sometimes below cost | Establishes the customer |
| Ink and toner | High margin | Where the profit is made |
By pricing the printer low, the maker gets printers into homes and offices, establishing customers who will then buy ink for years. The high margins on the ink more than make up for the cheap printer, generating far more profit over the printer life than the device sale alone. This is why printers can be remarkably cheap, since the maker expects to earn its return not on the printer but on the ink the customer will buy, making the low printer price an investment in a future stream of high margin supply sales.
The Lock In That Makes It Work
The model only works if customers buy the maker own ink rather than cheaper alternatives, so makers work hard to lock customers into their supplies. Printers are designed to use proprietary cartridges, and makers use technology and legal means to discourage or prevent the use of cheaper third party or refilled cartridges.
This lock in is essential, since without it customers would buy cheap ink and the maker would lose the profit that justifies the cheap printer. But the lock in also creates conflict, since third party ink makers and refillers compete to offer cheaper supplies, and customers resent being forced to buy expensive proprietary ink. Makers fight to protect their ink sales, using cartridge designs, chips that reject non genuine cartridges, and legal action, while third parties and customers push back, making the defense of the ink monopoly a continual battle that is central to the business, since the ink profit is the whole point of the model.
The Vulnerability
The model has a fundamental vulnerability: it depends on customers buying the expensive ink, and anything that lets them avoid it undermines the economics. Third party ink, refilled cartridges, and customer resistance all threaten the ink profit that the cheap printer relies on.
If customers successfully use cheaper ink, the maker has sold a cheap printer without capturing the supply profit, losing money on the whole arrangement. This makes the model vulnerable to the erosion of the ink lock in, whether through third party competition, technology that defeats the cartridge protections, or regulation that limits the makers ability to lock customers in. The tension between the makers need to protect the ink profit and the pressure from competitors, customers, and regulators to allow cheaper alternatives is the central vulnerability of the model, since the profit depends entirely on maintaining a lock in that many forces are trying to break.
The Alternative Model
Recognizing the tension and customer dissatisfaction, some makers have offered alternatives, including printers sold at higher prices with cheaper ink, or subscription models where customers pay a regular fee for ink delivered as needed. These alternatives try to address the customer resentment of expensive ink while still capturing the supply revenue in a different form.
The subscription model in particular converts the ink revenue into a recurring subscription, which can be more predictable and less resented if priced fairly, while still tying the customer to the maker supplies. These experiments reflect the pressure on the classic model, as makers seek ways to earn the supply revenue that is less dependent on locking customers into expensive cartridges they resent, though the fundamental logic remains the same: the money is in the ongoing supplies, not the printer, and the business must find a way to capture that supply revenue, whether through the classic lock in or through new models that achieve the same end differently.
The Bottom Line
Printer makers sell printers cheaply, sometimes below cost, and earn their profit on the high margin ink and toner customers buy over the printer life, the classic razor and blades model where the consumable, not the device, is where the money is. The model depends entirely on locking customers into the makers own expensive supplies, which makers defend with proprietary cartridges and technology, provoking continual conflict with third party ink makers, customers, and regulators. This lock in is the model central vulnerability, since the profit depends on maintaining it against the many forces trying to break it, driving some makers toward alternative models that capture the supply revenue in less resented ways.