Controlling the Price of Ink – What Can Consumers Do?
Study Finds Consumers Overcharged for Inkjet Cartridges
A recent study by the American Consumer Institute looked at the inkjet printer and ink cartridge market and found that consumers are losing billions of dollars due to overpriced ink. Because consumers are not given sufficient information of the cost of printing, they are frequently lured into buying what appear to be inexpensive printers, only to find they will pay substantially more for ink. The lack of information has led to increased industry prices, excessive profits and higher market concentration. The study finds that, by simply giving consumers better information on the cost of printing, consumers would save $6 billion per year in lower ink prices.
Cheaper Printers, Pricy Ink
With the spread of computers into the average household, the costs of related technologies have become a source of rising concern to consumers, including an increased awareness of computer printing costs. While inkjet printer prices appear to be affordable, some consumers have expressed dissatisfaction, alarm and frustration over the price of inkjet printer ink cartridges. When buying printers or getting free printers with the purchase computers, consumers receive too little information on printing costs. Once a consumer buys and begins to use their ink jet printer, they have no choice but to buy expensive ink. This had led to many consumers into paying more for ink in just one year than the cost of the printer itself, and (as shown below) more per milliliter than other more exclusive items. In fact, according a study – “Inkjet prices, Printing Costs and Consumer Welfare” – written by TeleNomic Research and released by the American Consumer Institute, not only are inkjet prices exorbitantly high, but they have, by one estimate in the study, increased many times faster than the rate of inflation.
Comparison of Luxury or Costly Liquids
Price per Milliliter
Multicolor Inkjet Cartridge
Black Inkjet Cartridge
Prada Atomizer Parfum
Dom Perignon Champagne (1998)
Prices Increasing, Consumers Losing
The study reports that inkjet printers are priced with little or no margin and, according to some authorities, well below cost in many cases. The immediate result is to impede market entry. Moreover, because these cartridges are seldom interchangeable between different printer models, there appears to be diminished price competition in the inkjet cartridge market. The combination of the lack of price competition and barriers to entry has resulted in a concentrated market, as depicted below. The lack of competition has led to high ink prices and profits, according to the study.
The available evidence and this study’s analysis suggests that competition in the inkjet printer and ink sectors is not as intense as it would be, if consumers were made more aware of the cost implications of their printer choices. Potential impediments for maximizing consumer welfare and “red flags” in the printer and ink sectors include:
· High seller concentration in the industry;
· Imperfect information-based barriers to entry;
· Rising inkjet cartridge prices;
· Supernormal inkjet profits for integrated suppliers;
· Reduced consumer demand and use of printers and ink; and
· Overall reductions in consumer welfare.
Information is the Key to Increasing Consumer Welfare
Market alternatives convey value to consumers, but the value of competition and product alternatives for consumers is attenuated if consumers have insufficient information to choose rationally among them. Competition is present, but can and should work better on behalf of consumers. Providing consumers with better information would allow them to make better choices that suit their printing needs and minimize their costs for doing so. That, in turn, would provide added discipline in the marketplace and encourage price competition that results in lower consumer costs for the combined purchase of the inkjet printer and its corresponding ink. In that general context, the study estimated that increasing consumer information and competition would avail sizable consumer welfare gains, conservatively estimated to be $6 billion per year once increased competition is fully realized in the marketplace. Unfortunately, ink is one of a handful of products that are exempt from Federal Trade Commission regulation under the Fair Packaging and Labeling Act. This means that the printer oligopoly can “slack fill” their products and profit from it.
What Can Consumers Do?
Until the industry is mandated into providing better consumer information, consumers should insist on better information before they purchase a printer. For consumers, the first step is to consider the amount of printing that you do in your home each year. For example, some consumers do very little printing, so ink costs will not have a substantial effect on consumer costs. In this case, a cheap printer may be suitable, depending on the quality of your printing needs. On the other hand, the vast majority of consumers print hundreds, even thousands, of pages per year. For this majority, ink costs do matter. In general, we recommend the following cost saving tips for consumers who print more than 1-2 pages per week:
- Do not buy a printer without knowing the estimated cost per page (monotone text, graphics and photos) and the cost of the refill cartridges. These costs are available, but seldom displayed.
- Free and low cost printers, often pushed by major electronic stores, are often the most costly printers to use in terms of ink.
- As a benchmark, a printed page of black text costs should cost in the 2-3 cent range, which would produce cost savings of approximately 60% over the average printer.
- If you are not in an immediate need for a printer, you can buy refilled cartridges for your current printer. However, be warned, these cartridges tend to have higher failure rates, so buy them only from reputable dealers who will facilitate any easy and costless exchange.
Finally, let us know your experience with ink jet printers and ink cartridges. Have you had problems or successes in dealing with the cost of ink? Should the law be changed to provide better package labeling? Please send your comments to [email protected].
POSTED: September 16, 2008
About The American Consumer Institute Center for Citizen Research
The Institute is a nonprofit educational and research institute. For more information or to contact us, visit http://www.aci-citizenresearch.org. This ConsumerGram is provided as a free service to consumers.