Getting their fill

GRAPEVINE, Texas — Every month, Mark Barnes used to buy $600 worth of new, name-brand inkjet and toner cartridges for printers that churn out a steady stream of contracts and marketing material in his real estate office.

But lately Barnes has been taking his empty tanks to a Cartridge World shop near his office, where he buys cartridges that have been refilled with new ink.

“I’m spending about $400 a month now,” Barnes said. “I like doing other things with my cash.”

Customers like Barnes represent a small but growing segment of printer owners who are buying private-label cartridges from refill stores and office-supply chains and plugging them into their Hewlett-Packard, Lexmark and Epson machines. They account for less than a quarter of U.S. printer ink sales, according to Lyra Research, which tracks the industry. But analysts say the number is certain to go much higher.

That poses a growing threat to the big manufacturers, who make more money from replacement cartridges than from selling printers.

Name-brand ink cartridges can run $30 to $50, even more for some color versions. Toner cartridges can top $100. After a few trips to the store, consumers who bought inkjet printers and businesses that bought laser printers will usually have spent more on replacement cartridges than on the machine itself.

“You sell inkjets (printers) to sell them ink,” said Cindy Shaw, an analyst with Moors & Cabot. “It’s very much the razor-and-blade business model.”

The printer manufacturers say their ink is better, and they point to independent researchers who have reached the same conclusion.

Burt Yarkin, who heads the U.S. Division of Cartridge World, said the savings on a refilled printer cartridge is 30 percent to 50 percent. The price break on toner cartridges, which are more difficult to refill, is closer to 15 percent to 20 percent.

Privately held Cartridge World, which was founded in Australia in 1997, has nearly 1,300 stores, including 440 in the United States, and says it will have 600 U.S. stores by year end.

Refill shops like Cartridge World, Rapid Refill Ink, Island Ink-Jet Systems Inc. and Caboodle Cartridge LP also compete with office-supply chains such as Staples Inc. and OfficeMax Inc., which sell private-label cartridges or offer in-store refilling kiosks.

HP watches these competitors closely and has sued or threatened to sue several of them for allegedly infringing on HP ink and cartridge patents.

Perhaps the biggest obstacle for refillers is to overcome the perception that their ink isn’t as good as HP, Lexmark, Epson or Canon products. The refillers say their ink is just as good. But research company QualityLogic Inc. found that up to 70 percent of refilled cartridges leaked or printed poorly, compared to 2 percent of HP cartridges. HP is a QualityLogic client.

Consumer Reports said it tested hundreds of cartridges and found that many were inferior in print quality and fade-resistant photos but a few matched their brand-name counterparts.