Tips for Starting An Inkjet Cartridge Refill Business

Many people ask us for tips for starting a refill business. We've decided to put together this tip sheet to help people start up.

1. Market Evaluation
2. Operations
3. Sales
4. Suggested Initial Inventory

Market Evaluation

When looking over your market, consider the following rules of thumb:

• About 50 percent of personal computers have attached inkjet printers.
• About 75 percent of home personal computers have inkjet printers.
• About 10 percent of inkjet printer owners are highly concerned about inkjet refill costs.
• About 20 percent of inkjet printer owners are likely to buy generic refills.
• Senior consumers are more concerned about inkjet refill costs -- but are more likely to purchase their own ink in bulk and refill their cartridges themselves.
• Certain types of businesses use more inkjet refills than average. Some of these are:
  • graphic design firms
  • architecture firms
  • engineering firms
  • advertising firms
  • photographic firms
• Other types of businesses are interested in our postal ink:
  • catalog mailers
  • mailing firms (sometimes known as lettershops)
  • utilities

Operations

Some key areas of operations are the following:

• Equipment
• Ink
• Cartridges
• Employees

Equipment

Equipment is available at three different levels:

Beginning Equipment

At this level, the required equipment is the following:

• syringe bottles or syringes.
• a hand drill with a #55 or 1/16 inch drill bit (from your local hardware store). A drill press is very helpful and will allow you to do neater work.
• a small, securely mounted vise to hold cartridges with.
• an adjustable wrench (approximately a 12 inch handle).
• a supply of vinyl electrical tape (from your local hardware store).
• a supply of 8-32 x 1/4 inch set screws (check your local hardware store, Home Depot, or a fasteners supply house). Stainless steel is preferred, but ordinary steel will work in most situations.
• a hot glue gun and glue stick supply (check your local craft supply or Wal-mart).
• labels (available through most quick printers or Mail-boxes Etc).
• shipping boxes and packing material.
• ink.

This equipment will allow you to operate a low volume inkjet cartridge refill business.

Medium Volume Equipment

At this level, you will want to purchase some of the more specialized equipment available, such as:

• air-powered syringes (about $400 to $1500)
• air-powered vises
• drill press

High Volume Equipment

You may eventually wish to look at some of the high volume equipment. Two examples:

• Self-contained refill equipment for HP 51625A -- ranges from $5000 to $20,000
• Custom refill equipment for any specific cartridge, 1 cartridge per 30 seconds throughput -- $250,000

Ink

Initial ink stock depends largely upon your customer base. However, we have found some rules for guidance. The following are the most popular inks to refill with.

Black ink

• * WJ 106 -- Older HP cartridges, and some Lexmark
• * WJ 114 -- Many Apple and Canon cartridges
• * WJ 163 -- Most popular newer HP models (600, 800 series)
• WJ 161 -- Canon BJC 600 series
• * WJ 165 -- Canon BJC 4000 series
• * WJ 190 -- Newer Epson Stylus Color models (400, 500, 600, 800 series)
• WJ 171 -- Older Epson Stylus Color II and Stylus Color 200 models

Color Ink

• WJ 242, WJ 635, WJ 716 -- Canon BJC 600 series
• * WJ 245, WJ 639, WJ 720 -- Canon BJC 4000 series
• WJ 219, WJ 615, WJ 706 -- Older HP series (400, 500)
• * WJ 243, WJ 637, WJ 717 -- Newer HP series (600, 800)
• * WJ 264, WJ 659, WJ 737 -- Newer Epson Series (Stylus Color 400, 600, 800)
• WJ 255, WJ 649, WJ 730 -- Older Epson Stylus Color (200, 500)

The asterisk (*) signifies most people's highest volume products. If startup cash is tight, we suggest that you focus on these inks and cartridges first.

There are many other inks, but these are limited to printers with low installed base. We suggest that you consider purchasing those inks as the refill opportunities come up. In general, you should be able to pay for a pint of ink with the sale of three or four cartridges.

Do not purchase more than 1 pint (450 ml) of each ink until your volume begins to move. After all, on some of the Canon cartridges, you only put 2 ml of ink into a cartridge. Some of the larger HP cartridges will use up to 60 ml of ink. Eventually, you will want to purchase in larger volumes to reduce your ink cost on your most common refills.

Black ink is more popular than color ink. However, as a refiller, you can make more profit refilling color cartridges.

Cartridges

This has always been the most difficult part of starting a refill business. You must get cartridges. There are several options:

• Become totally a service business. In this case, you collect cartridges, refill them, and return them to the same customer from whom you collected the cartridges in the first place. You charge them for the refilling service and the ink.
• Pay a bounty for old cartridges. This works particularly well as a fund-raising event for a school or church group. In essence, you agree to pay perhaps $1 to the group for every old cartridge which they bring to you. Be careful of the price you pay, since you'll likely get older cartridges.
• Create a conversion kit. This is the method used by the high volume people who have designed an insertable tank. For most small refillers, this is not a practical method.
• Purchase a generic cartridge. Generic cartridges are just becoming available for some of the most popular older models such as the HP 51625A. However, the printer manufacturers have recently served notice that they consider these generic cartridges to be patent infringers, which places this strategy in doubt.

Employees

With a low volume business, it is essential that good control of labor costs be accomplished. With training, few cartridges will take more than 10 minutes of labor to refill. However, the first time someone refills a particular cartridge, it may take up to 30 minutes.

A well-organized work area which keeps all tools and instructions readily available to the refiller is key.

Where possible, refill multiple identical cartridges in batches. This will reduce setup time.

We make the following additional suggestions:

1. Utilize family members
2. Stick with temporary, part-time workers. Look for thinking people, since the variety of cartridges requires some adaptability.
3. Focus workers on a particular type of cartridge. Cartridges basically fall into three types:

• Sponge filled
• Vacuum-retained
• oddball

Sales

Sales of refill cartridges are best made in several ways:

• You can personally visit companies which would use substantial amounts of cartridges and offer to refill those cartridges for them. This is excellent business, since this allows your salesman to develop a weekly route, picking up cartridges and dropping them off. Unfortunately, many companies prefer to pay on 30 day terms, so this can be a bit of a problem. (This can often be overcome by setting up two prices -- one price for cash sales, another for 30 day terms).
• You can develop a fund-raising package where you agree to refill all the cartridges which a group brings to you for a given price. They pickup the cartridges from parents, friends, etc. and return the cartridges. You can often get good payment terms here, such as requiring payment up front from the group. They collect the money from the cartridge owner and the group keeps a portion of the fee.
• You can link up with local computer retailers. Remember that they will want 40 to 60 percent of the retail price. In this case, they act as a collection point, you pick up daily or weekly, and return the product to them. They pay you.
• You can explore other types of retailers. Today, office supply and computer retailers sell 95 percent of all refill cartridges. However, as the personal computer becomes more and more common, we expect that other types of retailers will begin to sell these products and services. As an example to open your mind to the possibilities, consider video rental stores, quick printers, Mail Boxes ETC, corner groceries, drug stores, locally owned hardware stores, and copier service companies.

You should strongly consider establishing VISA and Mastercard capability. Check with your bank. Although many banks will not accept home-based businesses for VISA and Mastercard, they usually know another company which will.

Your customers will evaluate you on the following points:

• Does the cartridge perform as well as a new cartridge?
• Price - but very low prices imply low quality. 25 to 35 percent savings seems to be about right.
• Speed of service.
• Honesty -- for example, telling a potential customer that his cartridge is worn out and can't be properly refilled.

Consider these points in what you do.