When Given the Chance, Will Consumers Pay More for Green?
We just began an interesting experiment at TerraCycle: Opening our first retail outlet and giving people a place to bring in what they'd normally mail to us as part of our collection Brigades. But that's not the most interesting part. We've decided to see what people will do when given the chance to pay whatever price they want for products.
In this economy, will people intentionally undercut the price? Will they, unaware of what we really charge, which, whenever possible, is the same or lower then comparable non-green products, actually overpay for their purchase? Or, might they, knowing we're a company working hard to make as sustainable a product as possible, make a point to pay more as a show of support?
Ah that, the mythical LOHAS consumer who will pay the "green tax" because a product is green (or greener) then other products. Nonsense.
The Myth of the Green Tax
I'm sorry to say it, but I don't believe there is a sizable percentage of the population willing to pay more for a product because of attributes that for the most part have nothing to do with directly increasing the utility, value, or benefit of having or using it. I've presented before groups of all sizes, viewpoints, and interests, from the biggest of corporations to the hippiest of the hippie, and the result is the same: I ask, if you had two similar products of equal efficacy, one green , one non green, the first costing $1, the second costing $1.05, which would you buy? 5% raise their hand for the green product. The results flip when I ask if they were priced identically.
I am willing to be wrong on this, and I'm sure people will come back here with stats to prove me wrong, but in my personal experience, when I ask whether people will pay more for green, EVEN in situations where those answering the question are likely influenced in their thinking by "what the person asking the question wants to hear" or motivated by wanting to look good to their peers, I still get the above results! Now that says something.
You may say that I'm getting these results during a down economy, they're skewed. Sorry, I've been getting the same results for years. Does that mean companies should cut out pricing greener products more expensively? Not at all. That is, if you can without a doubt prove to yourself you have a strong, consistent market for your offering.
But even then, you are limiting the impact your products will have by making them appealing to a small sliver of the population, who is already sold on the value of making more sustainable purchase choice. It's not your responsibility as a company to make a huge positive impact but then, if you could, and profit at it at the same time, why not?
So what do you think people did in our first week of operation? Tune in next week to find out...
More on Green Stores:
REI To Open New Prototype Green Store in Boulder
Wal-Mart Opens Green Supercenter in Texas
Zellers Green Retail Store A Canadian Prototype
Whole Foods To Open Lifestyle Store : TreeHugger