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Loss leaders 16 June 2005 Edition
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Most people realise that when they go to the supermarket to pick up their groceries for the week, some of those "special" prices are so special that they're being sold below cost.

Products sold at such low prices are called "loss leaders" and are a marketing tool designed to get people through the door. The concept is that, if you have a handful of products that you sell at below cost, customers will come in to buy those and while they're there they'll also spend money on other items with a healthy profit margin attached.

By and large, this strategy must work pretty well, or we wouldn't see these super special prices on offer at just about every supermarket in the country.

But it's not just supermarkets that give stuff away in the anticipation of making stacks of money out of your other purchases.

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One of the worst instances of this can be found in the printer marketplace.

When I bought my first inkjet printer (many years ago) it cost nearly $1,000 and although the ink cartridges weren't cheap, I could have bought more than 200 of them for the price of the printer itself.

Move forward to today however, and there are some printers out there that cost only a small amount more than the cartridges you need to buy to replenish their ink supply.

Yes, printer manufacturers are a bit like drug pushers. They'll almost give you that first "hit" for free but then, once you're hooked on their product, they'll squeeze every last cent out of you by selling the essential ink supply at a massive premium.

An item on Fair Go a while back proved that printer ink was actually more valuable than gold on a weight for weight basis -- and I can believe it.

Seeing an opportunity to cash in on this profiteering by the printer companies, thousands of small companies soon sprung up to offer third-party cartridges and refill ink at a much lower price than the branded item.

To fight back, many printer manufacturers added special chips to their cartridges that effectively rendered them non-reusable and unable to be refilled.

When some of those third-party suppliers fought back by reverse engineering those chips and again offering compatible products, battles blew up over patent rights.

Meanwhile, the printer manufacturers have also been fighting back on another front by claiming that third-party inks will produce vastly inferior results and cause damage to the printer itself.

While the former may (in some cases be true), the printer manufacturers have kind of shot themselves in the foot if they're hoping that customers will avoid cheaper refills for fear of damaging their printers -- after all, you can buy a whole new printer for only a little more than the cost of a genuine cartridge can't you?

What are your experiences with third-party ink cartridges or refilling kits?

Do you use them? Have they saved you money? Are there results as good as the genuine product? Have they caused your printer to spontaneously combust?

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