Price War Hits Digital Photos

Discussion in 'Digital Photography' started by MrPepper11, Mar 17, 2005.

  1. MrPepper11

    MrPepper11 Guest

    "The evidence seems to be that the future for printing is smaller than
    anyone had imagined."

    March 17, 2005
    A Price War Hits Digital Photos
    Wal-Mart, Costco Cut Cost Of Printing Snapshots, as H-P Reduces Rates
    on Paper, Ink
    Staff Reporter of THE WALL STREET JOURNAL

    A price war has broken out in digital photo printing.

    Wal-Mart Stores Inc., Costco Inc. and other retailers are sharply
    cutting prices on digital-photo prints in a furious effort to win
    consumers who are switching to digital cameras from traditional film.

    The companies that make home printers are also stepping up their bid to
    grab more of this business. Hewlett-Packard Co., which has sold many
    consumers on the convenience of making digital images at home, says it
    will effectively cut the per-print costs by 17% for people who own H-P
    printers and buy its paper and ink.

    The price cuts come at a critical time for retailers and printer
    makers. With the shift from film to digital picking up steam, the next
    two years are seen by many experts as crucial in forming consumer

    As the heavyweights slug it out, digital-camera owners are the big
    winners. They are in many cases finding that it is cheaper to print
    digitally captured images than those taken with film.

    Two weeks ago, Wal-Mart cut prices on standard 4-by-6-inch prints made
    from stored digital images to 19 cents from 24 cents. Wal-Mart, the
    nation's largest photo finisher, charges 29 cents apiece for prints
    from film.

    For customers who don't mind transferring the images from their
    computers to's Web site, the per-print price has dropped
    to 17 cents. (The prints are ready for pickup at the store in two
    days.) Wal-Mart's wholesale-club affiliate, Sam's Club, charges even
    less for a similar service: 15 cents, down from 16 cents before the
    recent round of cuts.

    To undercut Wal-Mart, wholesale-club leader Costco is planning to lower
    its rates this week on one-hour processing to 17 cents from 19 cents.
    Meanwhile, drugstore giant Walgreen's Inc. is running a digital-print
    special at 20 cents a piece for 50 prints in some markets, compared
    with the 29 cents it normally charges for digital or film prints.
    Walgreen's store signs proclaim that its prints are "half the cost of
    printing at home" says a spokesman. The calculation is based on the
    prices of home-PC printer supplies like ink and paper.

    The other players in this battle are the online photo sites such as and Ofoto, which is owned by Eastman Kodak Co. These
    sites accounted for a combined 8% of all prints made last year.

    Photo finishers are hoping that the lower prices will induce consumers
    to print more of their digital pictures. Consumers spent an estimated
    $8.2 billion for prints last year, including both those made at retail
    outlets and at home, according to Photo Marketing Association
    International, a trade group. But that is a fraction of the potential
    market: Only about 20% to 30% of digital pictures taken are developed.

    The price cuts also come as digital cameras are rapidly stealing market
    share from film cameras. Of the cameras sold this year, about 80% are
    expected to be digital. But despite the growth in digital photography,
    the number of overall prints made at home and at stores fell 4.5% in
    the U.S. last year to 27.4 billion, according to PMAI.

    With the film business drying up, retailers can ill afford to lose
    printing revenues, too. After a slow start, retailers are beginning to
    gain traction with digital printing. Digital prints ordered at
    retailers more than tripled last year, says PMAI, while the number of
    prints made at home were up 37%. And the momentum is clearly with the
    retailers: Last year, while about 61% of all digital prints were made
    at home, that is down from 90% in 2000.

    One reason is the sharp increase in retail outlets offering digital
    printing. Most drug and discount stores can now handle digital prints
    in their one-hour photo-processing minilabs. Labs can produce prints at
    a cost to operators of less than five cents a piece, says Greg Joe,
    marketing manager for Japan's Noritsu Ltd., a big minilab maker.

    Retailers with less business can install cheaper, but also slower,
    digital kiosks. The number of photo kiosks in the U.S. is expected to
    grow to 121,000 by 2008, up from 75,000 today, says Kerry Flatley, a
    consultant with market researcher Infotrends. Last year, 17% of
    digital-camera owners used a kiosk vs. just 6% the year before, she

    Both retailers and home-printer makers insist that the future of
    digital printing is leaning in their favor. Pierre Schaeffer, Kodak's
    consumer imaging marketing manager, says some consumers may accept the
    higher cost of home printing to, for instance, easily print pictures at
    a party for guests to take. But if they have a camera full of hundreds
    of pictures from vacation, they would prefer to take them to a low-cost
    retailer, he argues.

    Long term, home printing is likely to decline to just 15% of all
    prints, says Gael Lundeen, general manager photofinishing and Web
    services for Fuji Photo Film USA Inc., the leader in the minilab
    business with customers including Wal-Mart. "The third wave of digital
    photographers is coming in, and they find digital printing at home is
    very expensive and very inconvenient," says Ms. Lundeen.

    Not surprisingly, makers of printers disagree. Next month, H-P will
    effectively cut home-printing costs -- not including the customer's
    initial outlay for the printer itself -- to 24 cents a print, for
    customers who buy a 200-sheet value-pack, down from 29 cents, says John
    Solomon, H-P's vice president of imaging. He believes that as long as
    home printing is only 25% more expensive than the retail option,
    consumers will generally prefer its convenience.

    The online photo companies, meanwhile, are betting that consumers will
    print out many of their images in albums and calendars or on
    coffee-cups or refrigerator magnets. That is a prime source of revenue.

    All photo finishers are trying to make it easier to order multiple
    prints and upgrade to 5-by-7-inch prints, because that is where the
    profit margins are higher. For the consumer, for example, a 5-by-7
    print can cost five times what a 4-by-6 does, even though it is only
    45% larger in surface area.

    Of course, there's another possible answer to this debate over where
    people will print their digital pictures in the future. Frank
    Baillergeon, an industry consultant from Eagle, Idaho, contends that
    photo finishers are engaging in "a lot of wishful thinking."

    Most consumers, he says, appear to perfectly content to keep most of
    their images in their PCs. "The evidence seems to be that the future
    for printing is smaller than anyone had imagined," he says.


    A look at the dropping prices for printing pictures. The following are
    for 4-by-6-inch color photos.

    Print price Printer price Mailing Price Total
    Wal-Mart (1 hr.) 19 cents NA NA 19 cents 15 cents NA NA 15 cents
    Costco (1 hr.) 17 cents NA NA 17 cents
    Walgreen's (1 hr.) 29 cents NA NA 29 cents
    CVS (1 hr.) 29 cents NA NA 29 cents

    Home Printing
    Hewlett-Packard 24 cents (1) $150 NA 36 cents
    Kodak 62 cents (2) $150 NA 74 cents

    Online (3)
    Kodak Ofoto 25 cents NA 5 to 16 cents 30 cents 22 cents (4) NA 5 to 18 cents 27 cents

    1 Based on buying 200-print pack with ink for $48. Print price assumes
    $150 printer making 300 prints a year for four years.
    2 Based on 40 print-pack for $24.99 at CompUSA. Print price assumes
    $150 printer making 300 prints a year for four years.
    3 Online pictures take five days to arrive in the mail.
    4 Based on prepaid 100-print plan plus $4.99 shipping for 100 photos.

    Source: WSJ Research
    MrPepper11, Mar 17, 2005
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  2. Very interesting stuff.

    I don't know that people will print more digital photos (they say less than
    30% get printed) with lower prices. I know for myself and my wife we only
    print a fraction of our pics because we are taking 3X what we took on film,
    and then tossing all the bad ones. It always sucked waiting a couple weeks
    to get film developed and then finding out that half the roll was crap!
    hotchkisstrio, Mar 17, 2005
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  3. MrPepper11

    Scott W Guest

    I will probably print more as the costs go down. What they really need
    to lower the cost of is the larger prints, I would love to be able to
    get 12 x 18 prints for the same cost per square inch as I pay for 4 x 6
    prints. At $.19 for a 4 x 6 print a 12 x 18 should cost $1.71, if we
    are paying the same per square inch, but it cost me $4.00. Now $4.00
    for that size print is not bad but I would much rather be paying less
    then $2.00 for it.

    Scott W, Mar 17, 2005
  4. MrPepper11

    bob Guest

    If it was my machine, I would charge more too, because they need to
    change the roll of paper. I wish I had some place near me that had a
    machine with 12" paper -- the largest I know of maxes out at 8x10.

    bob, Mar 17, 2005
  5. MrPepper11

    Scott W Guest

    Around here it is Costco that can make the 12 x 18 inch prints, they
    look really good too. The last one I took there they had ready in an

    Scott W, Mar 17, 2005
  6. Very interesting stuff.
    I amazed that I'm one of the people saying this, but I have almost no
    use for 4x6 pictures any more, and I probably wouldn't get them if
    they were free. I already have 8 large boxes of photographs, and
    nowhere to keep them. At this point, all of my snapshots go onto the
    computer, on web sites.

    And if I have a good picture, I want it enlarged at least to 8x12.

    Dr. Joel M. Hoffman, Mar 18, 2005
  7. If it was my machine, I would charge more too, because they need to
    I'm amazed how easy it is to get 8x10 and how hard it is to get 8x12.
    I find 8x10 a fairly useless size because of the cropping.

    Dr. Joel M. Hoffman, Mar 18, 2005
  8. MrPepper11

    Scott W Guest

    You might try Costco, it seems that their print sizes are all 3:2
    aspect ratio or very close to it. I get 12 x 18 prints there and
    whereas I am not sure I think they may have a 8 x 12 size.

    Scott W, Mar 18, 2005
  9. MrPepper11

    George Kerby Guest

    You're in Houston, right?

    Try a "real" Camera Store:
    1. Houston Camera Exchange on Richmond
    2. Camera Center on West Gray

    Both have excellent service in 8" x 12" printing.

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    George Kerby, Mar 19, 2005
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