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Comment by ChuckMcM | Hacker News Reader

Yay, hopefully this will translate into a non-crazy ink refill situation which will translate into a much reduced price in ink cartridges. My hope is that the following will occur;

1) People who sell re-filled cartridges, and offer to refill your existing cartridges will no longer suffer malicious lawsuits from HP & Lexmark.

2) That will increase the supply and create a price competition between re-fillers. Making it possible to easily find ink cartridges at 1/2 to 1/3 the price that the printer manufacturer sells it for.

3) The manufacturers will reduce prices on their ink cartridges in order to support their revenue stream.

I also expect more counter measures like ink cartridge chips that 'self destruct' when the cartridge is exhausted to prevent refilling. And aggressive prosecuting under the DMCA people who reverse engineer cartridge chips to create work alike versions.

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If what you are hoping for is a situation where manufacturers will sell printers at a loss and then also sell ink at cost, I don't think that's a long-run equilibrium.

If you are looking for printers where you can get ink at cost in exchange for paying a bit more up front, that's available now: https://epson.com/ecotank-super-tank-printers

Kodak also did this ~10 years ago [1] but I cannot figure out if they still use this business model.

[1] https://outline.com/7ZNnYV

Thanks for the link to the Eco-Tank/Super Tank printers from Epson. I have ordered one of the wide-format ones to see how well it works. Sad that the 'print only' wide format is only available outside the US. Seems like 'print only' is the 'manual transmission' of the printer market :-)

What I always hope for, and never expect, is people competing and using engineering quality as a competitive discriminator. I want the ink jet printer that German engineers designed to show they could do a better job than the Swiss engineers. The one that prints repeatably color and registration accurate prints as the building it is in burns down around it. I had a Mannesmann-Tally printer that I swear would stop bullets while it continued to chug away on your printouts. I remember those days fondly :-).

I'll settle for paying a 50% gross margin on a printer that is supported by all my systems, doesn't use a proprietary paper, ink, or other part that insures I can continue to use and service it for 10 years.

I've heard this point expressed by lots of people with regards to different products in the markets, i.e. "I would pay a lot more for the product if it did x."

The fact that such a product doesn't exist tells me that either there aren't enough consumers like you out there to make a market at an acceptable price, or that consumers like you are willing to defect and buy a cheaper product, if it's cheaper by a large enough margin.

Again, not doubting your desires, but the market is giving you its answer to your offer ...

You are correct. I (and as I found out, many others!) have created a label for this effect, crapitalism. It arises from the bulk of the market preferring price over quality. When that happens, vendors that make a product for a lower price at the expense of quality take market share from vendors who maintain quality. The reduced volume at the quality vendor reduces their scale economics which puts still more pressure on margins, and they end up exiting the market. When quality has been completely driven out of the market (as it nearly has been in USB chargers) you get companies that can command better margins by having better quality.

I have always hoped that we might some day get a market maker for quality, imagine something like EBay but instead of matching up yard sale customers with swap meet vendors you matched up customers with the means and willingness to both recognize and pay for quality. Still waiting on that :-)

Information asymmetry is the problem.

We might want quality and be willing to pay for it, but still buy the cheap junk because we can't reliably identify quality in the marketplace. Paying more for a product could get more quality, but it might just be paying more.

It's a variation of the cherries and lemons in the used-car market.

This is the basis for "The Innovator's Solution", and another word for it is "disruption". In the book, Christensen argues that existing suppliers target ever-higher quality (because they have the technology to do so), leaving room for "good-enough" vendors to undercut them and take away their volume product-by-product, meanwhile funding them to develop ever-better products.

Suffice it to say I disagree with Christensen and have some truly remarkable proof of that, which this comment is too small to contain. :-)

Well then the companies that are selling the printers at a loss will have to change their business model or go out of business.

Don't forget:

4) if HP & Lexmark are unable to use the DMCA to stop cartridge refillers, then the price of printers will go up, as the printer manufacturers won't be able to make any profit on cartridge sales. They'll instead have to make all their profit on the initial sale of the printer.

That would cut the legs out from the Ink Jet market, which IMHO is a good thing. They are the most wasteful and craptastic printers. Making them no longer almost free[1] would make people reconsider getting them and maybe even consider not printing or buying a decent printer.

[1] Before you count the Ink costs of course.

I would be ok with that. Too many quality issues are currently swept under the 'well it isn't like you paid very much for the printer is it?' mat.

Isn't this a good thing? I'd rather not companies obfuscate the true cost of the things I buy.

You make a good point that it is good for consumers to be informed. But it is also a good thing for sellers to be able to price discriminate between high-volume and low-volume users, which is made possible by making more profit on the ink than on the printer. If they could not do this then printers would be more expensive than most people would want to pay, even though the cost of production is actually less. So there would be a lost opportunity from gains from trade, which results in decreased total social welfare.

But to reiterate, yes it would be good if we all knew how much cartridges would cost up-front. I've even heard of some printer companies (Samsung, if memory serves) selling printers with half-full toner cartridges, to make the up-front cost even lower. This gives consumers the (false) impression that toner will be cheaper than it is, on the thinking that "I just bought printer + toner for $80, therefore toner obviously costs much less than this". Unfortunately, this isn't true when it's a half-full toner cartridge.

As I recall, one of the endless antitrust-related suits that IBM was once involved with was a similar sort of price discrimination case involving printer supplies. "Overcharging" for supplies that you alone can supply is a very straightforward way to do usage-based pricing on products that can't easily be sold that way.

This is often called "metering" and I agree it can be a good thing if, for example, you are selling an experience good where people cannot accurately predict how much they will want to pay for it until they try it--it allows you to charge less up-front.

But I think in practice when you see this used in consumer goods sales, it's likely because the manufacturer is exploiting psychology in which unsophisticated consumers do not accurately predict their costs. For example: https://academic.oup.com/qje/article/121/2/505/1884013/Shrou...

IIRC most Ink Jet printers are sold with half filled "starter" cartridges. They have to, or people would just buy new printers each time because they're cheaper than a replacement cartridge.

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