Steve:

I've read all the replies to this thread-- and everyone has it wrong.
This makes for an interesting story, though. Since we are an HP reseller
(though not the one that quoted you) let me explain the real deal.

The HP reseller channel, like a lot of other channels, has some real
problems. You must understand that HP3000s are sold through one simple
channel.  HP Netservers, PCs, and Laser Printers are sold through a
complicated host of other channels, including a two tier distribution
model, mail order, and direct from HP over the web. It's even more
complicated than that, but that will suffice for our purposes here.

The HP3000 distribution model is basically clear cut-- there is one
distributor and a small number of resellers. The pricing to the reseller
is based on volume and it varies relatively little. The pricing to the
end user is based on competition and how little profit the reseller can
live on.

The Netserver/PC/LaserJet models are very different. Volume discounts to
resellers vary widely. Mail order, direct web sales, and reseller sales
all compete and they all purchase from dozens of sources. However, there
is a definite "street" price. That price is determined by a very
efficient market that seeks the lowest price for these commodity items.
Since the high-volume sellers get the best price to begin with, their
selling price usually sets the "street" price. If you purchase a
LaserJet from a big mail order catalog or a national computer chain,
their margin on a $1200.00 printer is likely under $10.00. That's TEN
DOLLARS.

Now, if the reseller that quoted you your printer sold you that same
$1200.00 LaserJet, his margin would be zero or a negative number. The
big mail order catalog sells thousands of these printers a day, your
little reseller sells two a month.

I suspect the printer you were trying to purchase was a LaserJet 8500 or
something like that. Your reseller was telling you the truth that the
Direct from HP web price is the same as his price. I have even seen that
the direct from HP price or Big Catalog price to the end user is lower
than my distributor's cost! In fact, your reseller stopped making money
selling hardware about three or four years ago. Today, he must sell
software, services or staff augmentation in order to stay in business.
He sells hardware as a favor or as a way to provide turn-key products
and services to his customers. In two years he won't sell hardware at
all.

The bottom line? If you like your reseller's personal service, then pay
the 10% premium for that service. Otherwise, go buy the printer from the
web-- your reseller won't lose any sleep over that sale. There is a
certain $1400.00 printer we sell to our customers where our profit is
three dollars. Our profit on the printer cable is nine dollars. I tell
our customers this right up front. Some buy from us, some buy from a
catalog. Either way, our business relationship is focused on the
software and services that go along with the hardware. That's where we
can actually make money.


John Painter
Computer Solutions, Inc.
http://www.internetcsi.com

----------------------------------------------------


Steve Hammond wrote:
>
> Help, I realize asking someone to explain HP pricing to me is like asking my 13-year-old to explain nuclear fusion to me, but...
>
> I am looking for a printer to replace a C30D in the computer room. I checked the HP web site and found a printer that seems to suit our needs.
>
> I contact our HP sales rep, who directs me to Client Services. Client Services directs me to an East Coast VAR (whom I will not name). I get a quote from the VAR and the price of the printer is about 10% higher than the price HP quotes on its web site. When I questioned the VAR about this, I was told that HP quotes 'street' prices on the web pages and the price on the web page is almost exactly what HP charges them for the printer.
>
> Now why is it that I can't buy the printer from HP (unless I want to put it on my credit card via the web site), I have to buy it from a VAR and I have to pay more for the printer from the VAR.
>
> To paraphrase Ricky Ricardo, "HP, you got a lot of 'splaining to do!"
>
> steve hammond
> washington dc