I started buying organic milk recently, and while I love that I’m lessening my environmental impact, I’m not wild about the higher price. The fact is that buying green is not always the cheapest option, at least in the short term. However, there are different ways to look at pricing. What’s the value of the product? What’s the life cycle cost? What are the long-term implications of the cost of a product? Most of these considerations won’t help with my milk buying, but they do help with other kinds of purchasing.

In talking with Scot Case (long-time environmental professional and TerraChoice VP) a while back, he pointed out that a lot of organizations use different kinds of pricing calculators to facilitate the procurement process. For example, if you measure the life cycle cost of a range of products, you may find that the cheapest one in the short term is the most expensive over the lifetime of that product. Think about compact fluorescent lights (CFLs). They cost more outright, but they last longer and use less electricity, making them cheaper overall.

Less common than life cycle calculators are value pricing calculators. These calculators take into account different product factors like price, performance and environmental impact. Products get points for each category, and the total scores are compared for the product with the best value.

For a real-life example of pricing analysis I talked to the folks over at SCA Tissue about how they sell their EcoLogo-certified paper products to their business customers. I was told that one of SCA’s popular products is something called the Xpressnap system. It’s a controlled-consumption dispenser that limits consumer napkin usage. Less waste = good for the environment. Less material needed = good for the business bottom line. In a life cycle cost review, Xpressnap is less expensive overall than other competitive products. It’s a good selling point, and one that SCA has used very successfully with big-business customers.

Posted by Mari in Green business, Green products, Procurement