Brother Refresh EZ Print Subscription Service

Brother Refresh Service

Basic Information
Release Year	2021
Product Type	Subscription-as-a-Service
In Production	Yes
Official Website	Brother Refresh

The Brother Industries Ltd.: Refresh Program Subscription Service is a Subscription-as-a-Service (SubS) launched in August 2021. The program claims to offer domestic and business users the advantage of an on-demand, lower-cost printing solution that provides genuine Brother consumables directly to their door, without the need for end-user consumable management.

The Brother Refresh service currently offers two programs: EZ Auto Reordering (abbreviated as EZ-ARP), where the end-user pays only to replace a depleted cartridge or EZ Print Subscription (abbreviated as EZ-PSP), where the the user pays per page printed.

Listed are the program features offered to the end user to maintain and service their machines:

	EZ-ARP	EZ-PSP
Auto Cartridge Ordering	Yes	Yes
Free Trial	No	Yes
Payments	Pay-Per-Cartridge	Pay-Per-Page
Cartridge Type	Standard or XL	XL or Super XL
Shipping Costs	>$19.99 Free	Free (plan-based)
Warranty	No	Limited (plan-based)
Customer Service	Yes	Yes
Flexible Plans	No	Yes
Easy Cancellation	Yes	Yes

Subscription Eligibility

Brother currently lists these printers available to enter the Refresh program. The printer can either be "Refresh-ready" (with Refresh EZ-Print Subscription ink and toner cartridges included) or activated post-purchase via the Brother website. Once the printer is activated and enrolled to the Refresh service, only cartridges or toner supplied by Brother can be used.

EZ Print Subscription (pay-per-page)

Printer Type	Models	Promoted	Free Trial	Cartridge Series Disclosed	Cartridge Yield Disclosed
Mono Laser Printers	13	Yes	Yes	Unknown	Unknown
Color Laser Printer	0	Yes	No	N/A	N/A
Inkjet Printers	8	Yes	Yes	Unknown	Unknown

EZ Auto Reordering (pay-per-cartridge)

Printer Type	Models	Promoted	Free Trial	Cartridge Series Disclosed	Cartridge Yield Disclosed
Mono Laser Printers	141	Yes	No	Yes	Yes
Color Laser Printer	31	Yes	No	Yes	Yes
Inkjet Printers	0	Yes	No	N/A	N/A

False or Misleading Promotion

• Brother clearly advertises color plans in the EZ Print program yet no color printers are currently eligible.
• Brother clearly advertises discounted ink & toner in the EZ Auto Reorder program yet no inkjet printers are currently eligible.
• Brother does not state cartridge series or yield on their website nor prior to enrollment in the Refresh program.

Subscription Claims

EZ Print Program

Brother purports that the EZ Print subscription program can save the end-user up to 50% on genuine Brother ink or toner. This is accompanied by a caveat located in the legal disclaimer found at the bottom of the subscription information page.

It states: based on monthly subscription cost in U.S. for Mono Laser Power Plan vs. average cost per page of eligible like standard capacity cartridges. Savings will vary based on Refresh EZ Print Subscription plan selected.

Obfuscated or Misleading Claim

• No color laser or inkjet printers are included in Brother's claimed subscription discount comparison.
• Only the highest-cost mono laser plan is used in Brother's claimed subscription discount comparison.
• Only a standard yield cartridge is included in Brother's claimed subscription discount comparison.

EZ Auto Reording Program

Brother offers a 10% discount on all orders of genuine ink & toner when subscribed to the EZ Auto Reorder program. The Program also enables the end-user to select a higher-yield cartridge if required.

Obfuscated or Misleading Claim

• No inkjet printers are currently eligible for the EZ-ARP yet Brother promotes "Ink & Toner Delivered Automatically" on the program page.

Subscription Analysis

Case Study

To investigate Brother's claim for their purported savings in the EZ-Print program, we used the listed legal disclaimer as a basis for the setup:

1. Mono Laser Printer: MFC-L2710DW
2. Highest Cost Plan: Power Plan
3. Standard Yield Cartridge: TN730

Notes

The Brother "Power Plan" includes:

• Credit $30: for add-ons only
• Bonus Toner Eligibility: once only
• Drum Replacement: undefined

It should also be noted that:

• the credit applies to any consumable or additional page cost outside the plan limits, not subscription cost.
• bonus toner is supplied once and as a 'back-up' in case the 'plan' replenishment does not arrive on time.
• drum replacement is not specified by Brother as to availability, frequency or supply discretion. In the case study here, the MFC-L2710DW requires a DR730 drum unit which Brother states has a life-span of 12,000 printed pages.

Printer

The Brother printer chosen is the MFC-L2710DW. The rational for choosing this model for the case study are as follows:

• it is one of the most popular machines and has the highest number of reviews on the Brother eligibility list page.
• it has a sub $400 price point and is listed as eligible for the EZ Print Subscription program.
• it has parts and consumables readily available from a variety of sources.
• it is suited to a home / small office environment and has: automated duplex printing, a large 250 sheet tray capacity, wireless, ethernet or USB connections, 32 page-per-minute print speed and has a 50-page capacity automatic feeder to copy or scan documents.

Analytics

Market analysis shows that laser printers are the most popular machine for everyday printing:

• the average home office / small office user prints 3.4 monochrome pages per day
• Consumer Reports.org reports their subscribers print a median of 33 monochrome pages per month
• monochrome printing now makes up to 80% of total print jobs in a home or small office environment.
• color printing has decreased in use by 34% over the 3 year period measured.

By comparing the user data against the claim of cost-savings and stipulations in methodology from Brother, it is clear the scenario is one in which the choice given by Brother in no way matches a real-world situation or printing habits of the user. Furthermore, Brother engages in a purposefully misleading comparison when they state that the saving is based upon "average cost per page of eligible like standard capacity cartridge" for they must compare identical products as only genuine Brother cartridges are supplied in the program.

Assumptions

To create a more realistic comparison we set rules to give the end-user a more reasonable, flexible and real-world choice when investigating print pricing. In our use case:

• the end-user keeps the printer for a minimum 12 months.
• the subscription is maintained for a minimum 12 months.
• the end-user runs a small office and prints 15 times the average page rate (6000 pages-per-year)
• the end-user has a broader choice of consumables.

EZ Print Cost Comparison Matrix

	Brand	Yield	Price	Pages	Cartridges	Total Cost	Page Cost	Generic Lockout	Internet Required
Brother	Brother	1200 +-	$24.99	6000	5	$299.88	$0.050	Yes	Yes
Staples	Brother	1200 +-	$47.99	6000	5	$239.95	$0.040	No	No
Office Depot	Brother	1200 +-	$47.99	6000	5	$239.95	$0.040	No	No
YB Toner	Generic	1200 +-	$18.95	6000	5	$94.75	$0.015	No	No
True Image	Generic	1200 +-	$19.50	6000	5	$97.50	$0.016	No	No

False or Misleading Claim

As the above data illustrates, Brother's claim that the program can "save the end-user up to 50%" is purposefully misleading. They do this by using the following methods:

1. Scenario Manipulation: Brother creates a situation where the user runs with the service for only a month, ending the program before the billing cycle before or prior to the auto-replenishment alert.
2. Comparing Different Programs: this is a clear misrepresentation. Here Brother relates Pay-Per-Page to Pay-Per-Cartridge, a false and misleading comparison. The matrix shows us that the Brother price is roughly half that of the next supplier, but here the user owns the cartridge bought from Staples and only the rents the ability to print a certain number of pages from Brother.

We note also that should the end-user run with the program for a year, then the Brother program is the most expensive option for printing.

EZ Auto Reorder Brother Cost Matrix

	Brand	Yield	Price	Pages	Cartriges	Total Cost	Page Cost	Generic Lockout	Internet Required
Brother	Brother	1200 +-	$43.19	6000	5	$215.96	$0.036	Yes	Yes

NB: Brother only listed here. All other competitor data remains identical to the EZ Print Cost Comparison Matrix.

Validated Claim

The EZ Auto Reorder subscription offers the end-user a 10% discount on cartridges while they are enrolled in program. This reduces the cost-per-cartridge by $4.80 when the product is supplied directly from Brother.

Subscription History

Overview

To understand the introduction rational of subscriptions within a traditional hardware company such as Brother, one must first understand how the changes in sales and profitability have historically developed within the markets that they operate.

Brother Industries, Ltd.

Brother was established in Japan in 1908 primarily as an industrial manufacturer of machine tools and parts. It was not until 1928 that Brother launched its first mainline product: a head-wear specific industrial sewing machine. Owing to their history in manufacturing, Brother's machines were good quality and highly regarded. They sold well and prior to the second-world war, Japanese companies like Brother had access to a productive and low-cost labor force. This allowed Brother to expand its product line and to firmly capture a share of the industrial sewing category; a market in which they still operate today.

The post war years saw significant Japanese government focus on industrialization. And by the early 1960's and 1970's, Japan's electronics manufacturing sector was not only mature but had rapidly expanded. Facts such as a large national labor pool, new access to western technology and the skill-to-cost benefits from earlier government investment, quickly made Japanese manufacturers the leaders in high-quality, low-cost electronic products. Brother too, benefited from this economic environment. It invested heavily in the technology sector and by 1971, released a product that would change the company direction and growth into the foreseeable future: a high-speed, dot-matrix printer.

Segment Reliance

Into the 1990's, Brother identified its Printing & Solutions (P&S) segment as a global category for growth and shifted significant resources directly towards this market. And while Brother maintained its leadership in core categories such as industrial sewing, machine tools and parts, the company continued to make further gains through P&S and in electronic products such as labeling. The returns in these segments continued to provide Brother capital for expansion. They developed product lines that took advantage of broadening demand, not only through industrial buyers to whom Brother traditionally catered, but with small office and home office users (SOHO) who began to purchase Brother's products for their high reliability and reasonable cost. By the mid-1990's Brother had a mature and robust printing portfolio and had released many successful and profitable lines:

• laser printers (both color & mono)
• all-in-one printers (print, fax & scan)
• inkjet printers (high-speed color)
• garment, label and mobile printers.

Throughout the late 1990's and early 2000's the company continued to focus within the P&S segment and invested in long-term channel relationships. Now an establish brand, Brother's sales and profitability were firmly tied to the parts and consumables market. Brother understood that through channels such as OEM, vendors, distributors and large retailers, they could maintain strong end-user brand affiliation and leverage this to further create an ongoing demand. To acquire new industrial and SOHO buyers, Brother engaged in heavy promotional schedules and further product offerings. It introduced high-end, all-in-one laser printers and high-speed inkjet printers, all at price points not before seen in the market. Brother also sought growth in emerging countries. The company invested aggressively in Asia by promoting and selling low-cost monochrome laser printers, which by now had became their strength and specialty.

Then into the 2010's Brother's previously positive financial results started to plateau. Its operating income and profits fell, and net sales, though marginally up, had failed to meet forecast. Furthermore, its Printing & Solutions (P&S) segment had not shown the growth expected, especially in Asia where they had invested heavily.

Despite these poor results Brother's strategy remained largely the same: grow in all business and all regions. It continued to push forward with its aggressive emerging market expansion and it increased mass advertising throughout Japan. Further products and solutions were added to the P&S portfolio including web-conferencing and greeting card software. Brother continued to focus on maintaining its US and EU presence through retail channels and seeking growth through new SOHO & SMB customers. Brother also increased sales staff, sales channels and supporting promotions in an effort to expand the sales of mono laser printers in emerging markets.

But by 2015 investors and shareholders had started to ask some tough questions. Brother had achieved net sales forecast targets in some segments but company-wide income and profit were in significant decline, The previously stable Machinery & Solution division was in free-fall and the anchor for sales and growth, Printing & Solutions (P&S), had suffered a 4.3% profit contraction.

In Brother's EOY financial briefing the company acknowledged the stagnation in the P&S market and offered the following insights:

1. Global profitability in Laser Business Printers (LBP) was declining due to competitor entry and generic consumables availability.
2. The printer hardware market was now very mature and the targeted growth by new product releases was not returning profit.
3. Digitization of documents, smartphone uptake and their affordability continued to shrink the printing market by 5% YOY.
4. Multi-function Center (MFC) and All-in-One (AIO) machines were eroding sales growth of use-specific product lines.
5. Consumables demand for conventional inkjet cartridge machines were being replaced by high-capacity Ink Tank models.

With these points Brother had informed investors that the traditional strategy of developing hardware products, releasing them through sales channels and then realizing profitability through brand recognition and consumables sales had become highly uncertain. Furthermore, Brother acknowledged that these strategies had caused model proliferation, driven up stock holding requirements, cannibalized profitable lines and may have directly encouraged the demand for generic parts alternatives.

Here Brother did two significant things. Firstly, it downgraded its forecasts to mitigate pressure for short-term market performance stating that the business would not return to overall profitability until 2018. Secondly, and perhaps most importantly, it supported the profitability target by releasing a mid-term business strategy: CS B2018. In this document, Brother outlined a series of broad changes. It advocated for restructured business segments and saw the need to relocate personal and investments. It wanted to consolidate internal divisions to create "synergies" supporting B2018 but all change, Brother stated, must underpin a common function and enhance the task of business model transformation. That is:

'To change and reposition the existing printing business to one that is clearly defined for corporate profitability enhancement'.

Subscription: The Birth

'When You Cannot Thrive, Seek Rent to Survive'

(work-in-progress)

Brother Business Segment Return 2024

	Printing & Solutions	Personal & Home	Machinery	Network & Contents	Domino	Other
Sales Revenue	58.92%	6.64%	15.22%	7.00%	10.41%	1.78%
Segement Profit	72.50%	5.55%	13.61%	2.50%	5.42%	0.55%
Operation Profit	73.57%	5.56%	13.77%	2.22%	1.03%	1.11%