• Research among a range of different sized companies across a range of industries reveals it typically costs $11 to $33 in labor, lost productivity, and other costs to replace an empty laser toner cartridge. This cost is incremental to the cost of the physical cartridge. This estimate assumes a "typical" scenario. If the cartridge replacement process does not run smoothly, or if it is necessary to reprint a job, the cost could be even higher. Based on this research, for many companies, $21 is a reasonable average cost to replace a laser toner cartridge.

• The total cost of replacing laser toner cartridges is approximately $2 billion a year, worldwide.

• Many people/departments can be affected when a cartridge needs to be replaced, including the users of the printer, the cartridge installer (might be an outsourcing contractor in some cases), purchasing, accounting, supply room staff, receiving, and the mailroom.

• 31 to 56 minutes of combined employee time are typically consumed every time a laser toner cartridge is replaced. The sources of this time are:

• Direct labor
• Lost productivity
• Overhead staff functions

• Cartridge replacement costs can be reduced by 1) storing spare cartridges near the printer in which they will be used and 2) by using high quality cartridges that yield double the pages. These cartridges cut replacement cost in half, since they are replaced half as often.

Introduction

According to Marshfield, MA-based research firm CAP Ventures, the world market for laser toner cartridges will be more than 100 million units in 1999, and of these, approximately 50%, or over 50 million, will be consumed in the US market. The man-hours consumed by company employees to take inventory, install and recycle these cartridges are considerable and are something that buyers tend not to account for when evaluating their laser toner cartridge costs. Since laser printers are growing at approximately 10% per year, the number of cartridge replacements will also grow. Buyers who understand how to improve cartridge replacement procedures, reduce cartridge replacement frequency, increase user task responsibility, and reduce inventory investment will be able to minimize the "hidden costs" associated with cartridge replacement.

User – A person who uses a printer or an administrator or key operator responsible for a network or workgroup printer.

Installer – The person who replaces an empty or old cartridge with a new one. In some cases, the user is the installer. In other cases, installation is conducted by another company employee or an outsourced installer.

Outsourced installer – Some companies outsource cartridge replacement to external companies, as part of a broader set of outsourced services.

Overhead staff functions – Staff personnel who are not users or installers, but who are nevertheless affected by cartridge change-outs. Staff departments include a) functions that can be engaged every time a cartridge has to be replaced, such as supply room and mail room staff and b) functions that may not necessarily be affected every time a cartridge has to be replaced, but are affected when cartridges are ordered in aggregate, such as purchasing, accounting and receiving.

To understand the cost of replacing cartridges, it is necessary to fully understand the time it takes to replace a cartridge. To do that, it is helpful to recognize the specific tasks involved in replacing cartridges. The exact amount of time and cost incurred in replacing a laser toner cartridge depend on how much time each of the tasks takes. It depends most, however, on the answers to these three questions:

• Who installs the cartridge (user/administrator, company installer, or outsourced installer)?

• Is the user prevented from working while waiting for the cartridge to be replaced, and if so, for how long?

• Where are replacement cartridges stored (all cartridges stored in a central company supply room or a few cartridges stored near each company printer)?

Listed below are the tasks that a user or key operator typically executes when changing a laser toner cartridge him or herself, without calling a company or outsourced installer (this is the most common scenario; it is also the most efficient scenario since only one person is directly involved in replacing the cartridge):

• Observe Declining Print Quality or Low Toner Indicator
• Remove and Shake Cartridge to Extend Use
• Decide To Change Cartridge
• Retrieve Cartridge From Desk or Stand, Department Cabinet, or Central Supply
• Clean Printer As Required
• Unpack and Install Cartridge
• Rebox Empty and Place at Collection Point for Recycling
• Reorder New Spare Cartridges
• Wash Hands, Clean Up
• Re-print job, if necessary
• Receive Spares Order, Check and Shelve/Store

Research shows that this set of tasks typically takes a total of about 23 minutes (see Appendix 1). Among the biggest time elements is the trip to wash up after the cartridge change. This 23 minutes can increase to 32 minutes, or more, if replacement cartridges are stored outside the department, or in a central company supply room. In that case, either the user has to make a trip to the central supply room or mailroom personnel have to deliver the replacement cartridge to the user. Even when replacements are stored at or near the printer, there are times when the supply near the printer is depleted, necessitating a trip outside of the department at some point.

These times do not include the time it may take to reprint a job that was printing when the cartridge was running low on toner. If reprinting a job is required after a cartridge is shaken to extend its life, and/or when it needs to be replaced, the times above can go up significantly.

Listed below are the tasks that a company or outsourced installer typically executes when changing a laser toner cartridge:

• Receive Cartridge Installation Call
• Travel To Printer Location
• Installer Verifies Need To Change Cartridge
• Installer Retrieves Cartridge From Either a) Desk or Stand Near Printer, b) Department Cabinet, or c) Central Supply
• Clean Printer As Required
• Unpack and Install Cartridge
• Rebox Empty and Place at Collection Point
• Clean Up Area, Get Receipt
• Check on Spare Cartridge Supply
• Call Dispatcher for Next Job
• User re-prints job, if necessary

Research shows that this set of tasks typically takes a total of about 28 minutes (see Appendix 2). The biggest time element is the time it takes the installer to get from his/her location to the printer location. Again, this 28 minutes can increase to 37 minutes, or more, if replacement cartridges are stored outside of the department. Again, these times will increase if reprinting a job is necessary.

Often an installer makes a trip to a printer and finds that the cartridge still has toner in it. In that case, the installer simply shakes the cartridge to redistribute the toner and then reinserts the cartridge in the printer to extend the cartridge’s use. That means that for any given cartridge, the installer might first make a trip to shake and reinsert the old cartridge, and then some time later make a second trip to finally replace the old cartridge. When a trip to "shake and redistribute" occurs, the total installer time rises beyond the 28 minutes cited above.

Even if an installer replaces laser toner cartridges, user time is still consumed, and therefore, direct user cost is incurred. When an installer is involved with cartridge replacement, the user still spends time calling the installer, reordering cartridges, and receiving, verifying, and storing the new order. These activities could take 3 – 5 minutes, and average about 4 minutes.

There may also be considerable lost user productivity in this scenario if the user has to vacate his/her workstation while the installer replaces the cartridge. In this case, the amount of time sacrificed to lost productivity can be equal to the time the installer spends at the user’s printer (about 5 minutes).

While overhead staff may not be involved in individual cartridge replacements, they are always involved in cartridge replacement in the aggregate. The departments involved, and their responsibility regarding cartridge replacement are indicated below, and offered in greater detail in Appendix 3):

1. Purchasing: Receives and consolidates supply orders from user departments or the supply department and sends these to the vendor.
2. Supply Room Staff: Receives orders from user departments and fills the orders and maintains inventory (in some companies users may order directly from an outside vendor, usually through purchasing.)
3. Receiving: Handles incoming shipments for the supply room and direct-ship to individual departments

4. Mailroom: Makes internal deliveries, handles empties for recycling
5. Accounting: Issues purchase orders, reconciles and pays invoices, makes chargebacks

In practice, while it is difficult to pinpoint the exact amount of time a user or installer is involved in cartridge replacement, it is even more difficult to pinpoint how much overhead staff time is consumed in cartridge replacement because these processes vary from firm to firm. But it is reasonable to make two assumptions regarding overhead staff time: 1) some overhead staff time, and cost, is incurred in replacing cartridges, and 2) this time is proportionate to the number of cartridges that are consumed.

Total time to replace a cartridge can be calculated by adding user time, installer time (if user is not installer), and overhead staff time related to cartridge replacement. For the purposes of calculating overhead staff time, and costs, it is assumed that overhead staff time equals 35% of user or installer time, although this could range from 20% to 50%, depending on the company’s specific approach to cartridge replacement.

Time can be translated to cost by multiplying the average hourly burdened employee compensation rate by the amount of time it takes to replace a cartridge for each of the scenarios described above. Hourly employee compensation includes the employee’s salary, health and other fringe benefits, and a standard burden factor, calculated on an hourly basis.

Total cost of replacing a cartridge is calculated in the table below at two different levels of average employee compensation:

• A "low" level of $21.75, which includes a salary of $14.50 an hour (approximately $30,000 a year), plus an additional 50% in fringe benefits and standard burden factor

• A "high" level of $36.00, which includes a salary of $24 an hour (approximately $50,000 a year), plus an additional 50% in fringe benefits and standard burden factor

The analysis below assumes that it costs the same to use an outsourced installer as it does to use a company employed, non-user installer. The cost of using an outsourced installer occurs either in the form of a retainer rate or a flat fee per trip that the installer makes to the printer. (Note: many "flat fee" arrangements call for the outsourced contractor to be paid the flat fee every time he or she makes a trip to the printer, even if it’s just to shake and redistribute toner).

** Low end of range quoted in first bullet on page 1

The lowest-cost scenario is the one in which the user installs the cartridge and the cartridge is stored near the printer. If the "high" average employee compensation is used under this scenario, there are $18.60 in cartridge replacement costs. The highest-cost scenario is the one in which a company employed installer or outsourced installer installs the cartridge, the cartridge is stored in a central supply area that is some distance from the printer, and the user has to vacate his work area, and therefore can’t work, while the cartridge is being replaced. Using the "high" average employee compensation under this scenario, there are $33.00 in cartridge replacement costs. These costs range from $11.24 to $19.94 if the ‘low" average employee compensation is used.

Using an average of the high and low compensation range and the lowest and highest cost scenario, the average cost to replace an empty cartridge is approximately $21.00. This does not consider the cost of reprinting jobs that were printing when the toner ran out. Since this is often required, the average cost to replace cartridges is probably somewhat higher than $21.00.

The exact costs of cartridge replacement (above and beyond the cost of the physical cartridge itself) vary from company to company. The above discussion suggests, however, that replacement costs are considerable, and probably average over $21.00. This represents approximately 20% of the cost for the average OEM cartridge and can be as much as 30%-100% of the cost of remanufactured cartridges. Therefore, when making a cartridge selection, it is important that companies understand their costs of replacing empty cartridges.

There are two ways to reduce replacement costs:

• One is to reduce the amount of time for each task in the replacement process. Storing cartridges near to the printer and reducing or eliminating the central store room are among the easiest ways to cut some time and costs out of the process (although more on-site inventory is required).

• The second, and most effective way is to reduce the number of laser toner cartridges used throughout the organization. This can be done by reducing the cartridge change frequency by shifting to cartridge models that print more pages per cartridge while maintaining print quality and reliability. Cartridges that produce double page yield will reduce cartridge replacement costs by half, saving an average of $10 per cartridge.

A cartridge line designed specifically to do this is the PageMax™ family of laser toner cartridges from Clarity Imaging Technologies, Inc. PageMax offers double page yields over OEM cartridges and up to 50% lower cost per page vs. Hewlett-Packard and Lexmark, without sacrificing image quality or cartridge reliability. PageMax cartridges are available for use in the most popular Hewlett-Packard and Lexmark laser printers. They are also available for other Canon-engine-based printers.