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A recent report by IBISWorld forecasts continued downward pressure on the prices of 3D printers during the next three years as new vendors enter the market. The average annual rate of decline is predicted to be 6.1%. This follows on from an annual decline of 4.7% in the three years to 2015.With the wider availability of entry level desktop models, the price range of 3D printers on the market is wide according to IBISWorld, spanning from $350 to $800,000, with an average printer price of $8500. Further, IBISWorld estimates an average industry profit margin of 18%.

February 24, 2016

3 Min Read
Report: 3D printers to continue to plunge in price as competition intensifies

A recent report by IBISWorld forecasts continued downward pressure on the prices of 3D printers during the next three years as new vendors enter the market. The average annual rate of decline is predicted to be 6.1%. This follows on from an annual decline of 4.7% in the three years to 2015.

With the wider availability of entry level desktop models, the price range of 3D printers on the market is wide according to IBISWorld, spanning from $350 to $800,000, with an average printer price of $8500. Further, IBISWorld estimates an average industry profit margin of 18%.

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UK-based Renishaw is a participant in the 3D printing solutions to the North American market with its selective laser melting unit for metal parts.

Prices of 3D printing machines will be largely shaped by other macroeconomic trends. Mounting import penetration will further encourage price-based competition in the market. As incumbent suppliers' dominance in the market is constantly challenged, vendors will continue competing based on the quality of their machines. Furthermore, improving technology in the 3D printing industry will allow suppliers to manufacture and assemble printers at lower cost, thus enabling further price reductions.

Therefore, in addition to declining prices, buyers will also have access to higher-quality machines in the coming years. As such, the ongoing improvements in 3D printing technology suggest that buyers are better off if they wait to purchase these machines.

The total cost of ownership (TCO) for 3D printing machines is moderate according to IBISWorld, as other costs related to 3D printing amount to between 50.0% and 100.0% of the benchmark price. First of all, buyers require additional equipment that will enable them to perform the printing, such as scanners. The use of such scanners allows the user to scan a part for subsequent 3D printing.

On a related note, most 3D printing will require the use of software tools. While a variety of software packages is available for free, they offer limited functionality, which may limit the buyer's ability to print the prototype according to their desired specifications. Thus, buyers may be better off investing in a paid software package, driving up the total cost of ownership. Moreover, buyers may require technical training to maximize the utility of their 3D printers, which, in turn, will further push up the TCO.

According to IBISWorld estimates, there are around 100 suppliers of 3D printers in the US market including manufacturers, distributors and retailers, including Amazon and Staples. The top four vendors of 3D printers account for over 50.0% of market revenue, indicating a high market share concentration. Stratasys Ltd. and 3D Systems, Inc. together account for over 55.0% of the market, which severely undermines buyer leverage in negotiations. Renishaw is ranked third in the US market with a share of 5-10%. There are an estimated 70 manufacturers of 3D printers in all active in North America according to IBISWorld.

Historically, the significant level of upfront R&D costs has limited the number of operators in the market and maintained the significant level of market concentration. Nevertheless, because 3D printing machines are in the growth stage of the product life cycle, there is an ongoing influx of new vendors into the market; as such, the top vendors' market shares have been constantly challenged in the three years to 2015. Mounting competition has placed a downward pressure on prices, in turn providing some relief to buyers.

In terms of purchasing decision criteria, end users weight technical factors (70%)higher than cost (30%). Within technical factors, the vendor's delivery track record rates highest (3o% of overall weight), followed by customer support (20%).

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