RISING GAS PRICES? ……WHAT ABOUT INK ?

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RISING GAS PRICES? ……WHAT ABOUT INK ?

 user 2007-03-20 at 9:44:00 am Views: 35
  • #17735

    Rising gas prices? Sure, but what about ink?
    Ask
    the average person about the biggest ripoff going, and they’ll probably
    reply gasoline.They’ll give chapter and verse about supposed
    conspiracies within the oil industry to fleece customers, because
    that’s the prevailing wisdom, no matter how misguided it may
    be.Meanwhile, other out-of-whack pricing strategies flourish without so
    much as a whiff of controversy.Take the refill canisters for ink-jet
    printers for an example. According to one estimate, the refills cost up
    to $8,000 a gallon, turning the colored liquid into figurative gold for
    the producers. The prices posted on the shelves are about $18 to $30
    for single refills, but that’s for a couple of ounces at best.Printer
    manufacturers use what’s called the “razor blade strategy.” Sell the
    product at a loss. Then make up for it and far more on the refills that
    are essential for operation. It’s been a proven strategy for the razor
    blade industry for decades. Ink-jet printer manufacturers have merely
    perfected the method.
    The total market for printer ink: $32 billion annually.

    My
    Epson printer cost about $100 new, but the Epson refill cartridges cost
    me about $55 a shot for a color and black ink set.After his company
    acquired an industrial printer manufacturer, a former technology
    industry representative once confided to me that selling colored water
    for a fortune was one of the best business opportunities going. He
    marveled at the profit potential of printer ink. Though not quite
    achieving the 80 percent margins in the software industry, it came
    pretty darn close. USA Today estimates that ink margins run close to 75
    percent.Yet, not a peep from the buyers — the same ones who are so
    willing to bellyache about the oil industry, where profit margins are a
    more acceptable 10 percent.Some relief for buyers comes from the
    remanufactured cartridges that sell for a slight discount. But some
    printer manufacturers use proprietary technology that keeps
    remanufactured versions of their inks off the shelves, and others try
    to limit the availability of spent cartridges in the
    after-market.Consumer Reports also reports that remanufactured
    cartridges may not be the bargain they may appear to be. They usually
    have shorter lives than the name-brand cartridges, according to
    research by Consumers Union, and colors, especially for photos, are
    less vibrant.There’s much talk about conspiracies in the oil industry,
    but not a word about the unusual uniformity in refill pricing among the
    ink-jet market participants. How come not one of the manufacturers has
    tried to challenge what appears to be an industry standard pricing
    model?Until now, that is. One company appears to be ready to disrupt
    the status quo. Kodak announced this past week that it will introduce a
    line of ink-jet printers that will have more affordable refill
    cartridges. It’s a hopeful sign. Let us hope the move will inject a bit
    of competition into a field where the uniform pricing among all the
    players fails to pass the smell test. The manufacturers may not be
    acting in concert in an overt manner, but it’s seems clear that there
    are clear price signals being sent among the printer producers.