On Knowing the Price of Everything and the Value of Nothing

binvention2.jpgThis treehugger is often disheartened when I write about a new product and the entire discussion in the comments is about how overpriced it is. In a recent post about the Binvention (which was about an article discussing why it cost so much!) , comments included: "All I have to say is: plywood, screws, saw, screwdriver...$20. It's a rip off aimed at people with no imagination ", "$110? No thanks....These things are nice and all, but yeah, they do inspire someone to create a similar system that will cost much less." , "I'll sell you one for $90 all day long.. There is a sucker born every minute." When we posted the MiniHome, people complained "Cheap at $125k? That's $400 a sq ft, or about five times what the most luxurious house costs for the space. It will be "cheap" at a fifth of the price." I do not mean to be critical of our commenters, but I think we have to discuss- why do green products cost more?1) The American Dollar is not what it used to be.
British Pound against American Dollar

If the miniHome had been offered for sale in the United States three years ago, it would have cost 30% less. That is how far the American dollar has fallen against the Canadian dollar because of oil, Iraq and the destruction of the American manufacturing sector. The Binvention at 59 pounds would have cost US$82. Don't attack the designers when it is the dollar that is falling through the floor.

2) Purchasing Power Parity: How Much Do You Pay for a Big Mac?

You can't just do a flat conversion of the cost in the UK of a Binvention to US dollars- things cost more there. It may be the expensive deliveries, the high rents, the reasonable minimum wage, high taxes to pay for universal health care, but everything is just more expensive. The Economist's Big Mac index compares the prices of hamburgers around the world, and finds that in the UK, the Big Mac costs 12% more than in the US, indicating that the Binvention should really cost US$91. Combine that with the decline of the dollar and we are down to US$69.

3) The Wal-Mart Effect.
walmarteffect2.jpgCharles Fishman calls it the Wal-mart effect; everything is cheap and getting cheaper. Companies are gutted as they ship production offshore to the cheapest source because saving money is what counts. In his book, He went on about a company making lawn sprinklers; to meet the price demands of Wal-Mart they started with offshore components, then moved to getting the entire sprinkler made offshore and laid off almost everyone in the factory. The Binvention could probably be made in PVC and sold for 20 bucks; in about six months it probably will. Will you be better off, will the craftsmen in the UK, and will the designer? I doubt it.

4) The Curse of IKEA

Many years ago I had the idea that computers belonged in the living room, and needed beautiful furniture to enclose them. (when? we paid $ 3500 for that 17" LCD monitor from SGI) Working with Julia West Home in Toronto, building them with care out of good materials in our own shop, we could not bring the retail price down below $3,000. Meanwhile, everyone is going to IKEA and getting nicely designed particle board units that they assemble themselves for a tenth of the price, and we sold exactly two units. Good design used to be aspirational, sold in small quantities from high street stores at high prices; Until we could afford better we made do with Mom's old sofa. IKEA has brought good design to the mass market at great prices- it costs less to buy a sofa there than to hire a mover to get mom's. (a good thing) but it has hammered the market for the limited run, higher end stuff that we used to aspire to. We no longer value how it is made, who built it and where our money went, we just care that it cost next to nothing.

5) It costs more to use materials that do not kill you, the workers, or the environment.

Recyled aluminum is not the cheapest material around. The miniHome materials alone total more than 50% of the current retail cost of the unit. You want cheap? Get vinyl. You want sustainable? Pay for it. When PVC, formaldehyde glues, clear cutting of forests and exploitation of workers are all illegal, the playing field will be a lot more level. When hundred dollar per barrel oil is fueling transport, local will be more competitive with offshore. When people care where their stuff comes from, what it is made of, and how it it is designed, they will pay a bit more for it. I hope.


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