The ink cartridge markup
Printer ink is one of the highest margin consumer goods available in Western society. Profit margins for standard printer ink can reach well above 2,000%. The actual manufacturing cost per ink cartridge is a closely held secret by manufacturers. However, some credible sources have been able to provide reasonable estimates.
How much does an ink cartridge cost to make?
A previous employee of HP claims that the manufacturing cost of a single ink cartridge is under $1. This estimate aligns closely with Consumer Reports which have estimated the cost of manufacturing ink between $20-$40 per litre. Given that a single ink cartridge now only holds 5ml of ink, this equates to 10-20 cents per cartridge.
A 5ml ink cartridge can cost you $50 to buy from a retailer. With the costs estimated above, this means the margin for a single ink cartridge can be more than 50 times the cost of the cartridge itself.
Preventing the use of third-party ink cartridges
The cartridge manufacturers try everything they can to keep you buying official ink cartridges. Some manufacturers have already started to install microchips that use cryptographic protocols in their cartridges. The manufacturers then secretly embed code in their firmware updates to prevent the use of any ink cartridges without their proprietary microchips.
We updated a cartridge authentication procedure in select models of HP office inkjet printers to ensure the best consumer experience and protect them from counterfeit and third-party ink cartridges that do not contain an original HP security chip and that infringe on our IP.
In other words, HP secretly releases a firmware update to its printers that prevent any competing ink cartridge manufacturers from selling their ink to consumers. This predatory business practice is called “tying”. Tying reduces competition and unfairly forces consumers into only buying branded products.
Putting the ink cartridge scam TOGETHER - The Razor and Blade business model
With the enormous margins achievable on a single ink cartridge, printer manufacturers have developed a highly profitable business model. These manufacturers did what any rational business is encouraged to do in this hyper-capitalist environment we live in. They sell the printers at a loss but jack up the ink prices and prevent consumers from buying ink from any other supplier. A perfect crime that they continue to get away with.
