INNOVATION CHALLENGE #7

The price of sustainability

How do you increase the willingness to pay for sustainable solutions and how should they initially be priced so that demand grows without bleeding the business? How and to what extent can you use an internal CO2 tax scheme until national CO2 taxes take effect?

Businesses have a number of sustainable solutions that are ready to go, but are difficult to sell. The customers - ultimately the builder – will often not pay for more for them. It is also difficult for companies to figure out how much to charge: Should they offer a cheap introductory price to get market demand started, should the price cover the actual start-up costs, or should they charge a premium price for the aspect of sustainability?

Key issues

• How to increase the willingness to pay for recycled plastic - also when the solutions are hidden from view and therefore have a limited ”feel-good” or marketing factor? What is the effect of labeling schemes?

• What are the opportunities for developing business and finance models in which builders have an interest in total life cycle costs of a product and not merely its purchase price? For example, what are the possibilities for selling building components as a service or establishing take-back schemes?

• How do you differentiate between customers and products so that you don’t end up in a price trap where a low introductory price becomes the norm for pricing later on?

Perfectly imperfect

Material-driven design

Example: BEWI ”100% raw” recycled material. It has a mark-up of 5-7% compared to virgin materials.

Sustainability

When plastic is best

Made for disassembly

Example: Velux is considering a more stringent internal CO2 pricing model than that required by law as a way to cost out sustainability.

XL markets for mixed recycled plastic

When not everything is ”small combustibles”

The price of sustainability Planetary Plastic Pavilion | Innovationsstrategi 33

Count what counts