New Printer Cartridge or a Refill? Either Way, Ink Is Getting Cheaper

Bill Powell, a sports photographer in Tulsa, Okla., shoots high school and college games and sells his work to the players and their parents.

An inkjet cartridge being refilled at a Cartridge World store.

Brenda Byrd demonstrating a new inkjet cartridge refiller at a Walgreens store on Fifth Avenue in Manhattan.

He prints on a Canon Pixma photo printer, but he does not use Canon ink. For the last eight months he has been buying refilled cartridges from Cartridge World. "I couldn't tell the difference, and my customers couldn't tell the difference," Mr. Powell said. "It saves me about 50 percent."

On the face of it, the logic of buying refilled ink cartridges seems pretty obvious. A new HP 26A cartridge, for use in about two dozen Hewlett-Packard printers, costs at Staples. Buy a Staples-brand remanufactured unit and you save 28 percent. Go to Cartridge World and you pay .39, a 37 percent discount.

Walgreens is installing cartridge refilling machines in the photo department of 1,500 of its 5,120 drugstores. Office Depot is testing the same kiosks in Charlotte, N.C., and Minneapolis. These machines, called the Ink-O-Dem, cost about ,000 and can refill a cartridge in about 2.5 minutes. "We cut out the middlemen," said Harry Nicodem, chief executive of TonerHead, the maker of the kiosk.

The automation gives Walgreens a price advantage: its HP 26A is .50. (You can also refill one yourself at home and, after you scrub the ink from your hands, save even more, 65 percent.)

End of story, right? You would go for the cheaper alternatives. But saving money is not just a matter of finding the lowest price. Two recent studies suggest that the more important consideration is the price per page printed, a number that is affected by the quality of a refilled cartridge.

Hewlett-Packard executives argue that you are wasting your money with refills, which is what you might expect the company to say. Manufacturers have a lot riding on a business model in which they sell ink cartridges that can cost a third of what the printer did.

The company has a point. QualityLogic, a Moorpark, Calif., test laboratory found that while new Hewlett-Packard cartridges had a 2 percent failure rate, 70 percent of remanufactured units did not last as long as promised. Hewlett commissioned the study, but Consumer Reports magazine came to a similar conclusion last May. Testers there found that in almost all cases, the refilled cartridges cost as much or more when evaluated on their per-page output.

Hewlett executives said that was because the company optimized each printer head - the strip of silicon containing the microscopic ink nozzles - for its printer, ink and paper. In its San Diego lab, "print head architects" use high-powered microscopes and cameras to watch the firing of those nozzles with various ink formulations made in three company labs to find the designs that work best. Lexmark International and Brother use similar printer-head technology on their cartridges. (Canon and Epson put their printer heads in the printer itself. Those companies did not respond to requests for interviews.)

Hewlett makes printer heads for some of its commercial printers that can last five years in continuous use. But the company said that its consumer printer cartridges were designed to be disposable. A printer head lasts just long enough to jettison that last drop of ink, a company official said.

Cartridge refillers have a differing opinion. They say those cartridges can be used three to seven times. And they have built a .5 billion industry to prove it. "It creates an opportunity for us," said Burt Yarkin, the chief executive for the United States operations of Cartridge World, which has 1,100 stores worldwide, 350 of them in the United States. He says a refilled cartridge drives down the cost of making a color print at home to about 13 cents a print, less than most retail photofinishers charge.

The refillers have put a dent in the printer makers' business. Market analysts at Lyra Research in Newton, Mass., which specializes in this industry, said the manufacturers were hanging onto about 79 percent of the .1 billon printer supplies business. The high-volume "remanufacturers," which supply stores with refilled cartridges, have about 18 percent of the market. The refillers at retail do about billion in business, but that is growing at the rate of 18 percent a year.

The impact is being felt. The migration to alternatives is a major reason net income dropped 47 percent in the fourth quarter at Lexmark International. "Consumers are becoming more aware of refilling and Walgreens effort will make even more people aware of it," said Charlie Brewer, managing editor of Hard Copy Supplies Journal, published by Lyra.

Dave Shaw, the vice president for franchise development at Rapid Refill, a Springfield, Ore., refiller with 40 outlets, said, "It's not a bunch of guys in the back with syringes punching holes in the cartridges." Franchisees buy about 0,000 worth of machines that suck out the old ink, centrifuge out any remaining ink that could contaminate the new ink, rinse the cartridge with cleaning fluid and then refill it. (A Cartridge World franchisee's equipment costs about 0,000.) "They absolutely have to worry about quality," Mr. Brewer said.

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