If you have bought any inkjet printer recently, you would notice that the price has dropped considerably. While the price of the printer itself has dropped, the price of the ink cartridge is still almost the same. It has now come to the point where the price of the cartridge is comparable to the price of entry level printers.

Take for example Epson Ink.  An Epson Ink cartridge typically cost around $30. And an entry-level all-in-one Epson printer cost less than $100. The same cartridge made by third party manufacturers generally cost around 75% less than the original Epson cartridge. While the large vendors disputes the quality of these third-party cartridges, they are generally more than enough for normal printing jobs.

This raises the question why the cartridges are so costly. The printer supplies industry has adopted the practice of cell phone and razor blade sellers: Charge low prices for initial equipment, then make money from ongoing fees for additional needed components. Vendors sell consumer printers at cost, or even sometimes at a 20 percent loss, say financial analysts at Bear Sterns who track Epson and HP. But on the flip side, both firms earn a 60 percent gross margin on ink jet and toner cartridges, says Bill Hand, financial analyst with Bear and Stearns.

This is a sponsored article paid by InkWarehouse.co.uk.