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The worst deals in tech: Are you being fleeced by these 7 overpriced products?

Christopher Null | Aug. 20, 2013
That shiny new tech toy might appear irresistible--until you realize its mark-up is obscene.

As for those subsidies, they may seem like a great way to save money on hardware, but those savings are offset by charges built into your service plan. You can, of course, bring your own, contract-free phone to most carriers for service, but that's not usually a good idea: Most charge the same price whether you buy from them or you BYOD.

Printer ink
Average cost: $80 per ounce

Average cost to produce: about $10 per ounce

Are you ready to be outraged? On a per-ounce basis, printer ink can be more expensive than vintage champagne or even human blood (which comes in at $17.27 an ounce) according to a 2012 Computerworld study. So why is printer ink so damn expensive?

The vendors say that making ink is more difficult than you'd think. HP, for one, says it spends a billion dollars a year on "ink research."

Finding out how much profit printer companies make on each cartridge sold is difficult. A QualityLogic study from 2012 found that the average cost of a color ink cartridge is about $21. But the printer companies don't report manufacturing costs specific to ink cartridges, and they obscure the ink-specific profit margins on cartridges in financial reports.

Nonetheless, for about $10 you can buy an injection-based refill kit that includes all colors of ink you need for your specific printer, along with special syringes for injecting the refill ink into the cartridge. Or you can spend $80 to buy all new cartridges. HP says home refill kits don't yield accurate prints, but many happy consumers would disagree.

Regardless, the price difference between refills and new cartridges exposes printer company markups. We asked HP to justify its pricing, but we didn't get a response. Just remember the business model at work here: The printer companies will sell you a shiny new printer for cheap, knowing they will recoup losses (if any), plus make a whole bunch of money selling you expensive ink during the life of your printer.

Wireless service
Average cost: $100 per month (Verizon's unlimited talk/10GB data plan)

Average cost to provide: $37 per month

First, let's kvetch: Considering the robustness and scale of the typical cell phone network, it really costs nothing to add one additional user to the system. When you fork over your $80 or $100 to Verizon Wireless or AT&T, they don't suddenly have to run out and build a tower to accommodate you. In many ways, the incremental cost of another cell phone user is zero.

But, yes, it costs money to run a mobile voice and data network. Cell towers have to be built, switching stations have to be maintained, and call centers have to be manned so that you can complain to someone about how high your bill is. All of this stuff costs money, but less than you might think: Verizon Wireless, for example, makes a 63 percent gross profit margin from wireless subscribers, according to financial statements. That doesn't include its depreciation costs (the gradual expensing over several years of the upfront cost of building towers), but even with that included, the company's price markups are high.

 

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