The difference between Price and Cost

  Shale TInkler     2014-01-07   View all blog articles

From the Archive: 04-06-2012

For anyone involved in eco-business, the question “but why is it so expensive?” would have been one heard all too often.
If you apply the triple bottom line philosophy, the business practise that evaluates People, Planet and Profit impacts before making decisions, you would no doubt be sick and tired of being compared on price to those that have no integrity, no sense of responsibility, those that sell the cheap and nasty products that are available everywhere and flood our media extolling their low prices.
But what is the cost of low prices?

Where has the system that enables us to consume more and more products cheaply got us?
The reality is that if a product is too cheap, someone, and/or the planet, has been abused to get you that product at that price.
You see, to make a quality product while respecting the environment, your community, your staff, your customers, takes more effort, time and money than abusing resources, people and the planet. This much is true and surely makes sense.

So why do the companies that are making this effort to be sustainable still get compared to “cheap and nasty” and told they are too expensive?
It seems people don’t yet understand the difference between price and cost.

Plastic is cheap in price but expensive in cost. Who pays for pollution, recycling, landfills, choked up rivers and seas etc? Certainly not the company that sold us the “cheap” plastic products.

Oil is relatively cheap in price, but who pays for wars in the Middle East, carbon in the atmosphere, polluted oceans and deltas? Certainly not BP, Shell or Engen.

Cheap synthetic imported clothing may look good on the mannequin and to your wallet, but who pays for the lost jobs in your community, who covers the cost of the social ills caused by the slave labour used to make it, where does it go when it is no longer good to wear?

I could go on…

This article:… shows how the top 3000 companies in the world have a combined environmental impact of $2.2 Trillion! This means that they sell us “cheap” products, make a killing, and walk away leaving us to foot the bill and try clean up their mess.

Natural and sustainably made products only have the price you pay attached to them. They can be recycled or are bio-degradable, they have been produced with reverence for the environment in which they are produced and consumed. Their price may be a bit higher, but their cost way less.

Organic food may seem pricey now, but what will be the cost if you eat processed, chemically altered food that is grown in a manner that kills the earth? Dis-ease and land that is unable to feed anyone. How expensive is that?

So, educate yourself, be a conscious consumer. Realise that you can have a powerful impact with the way you spend. Stop hunting for bargains, rather hunt for value and sustainability. Don’t believe the media hype that you need all these things just to be somebody or that what you bought last year is no longer cool. Watch “The story of Stuff”… It explains the concept of “costs of externalities” brilliantly.

Be aware, support those companies that adhere to the triple bottom line practices, boycott those whose practices you don’t agree with and therefore shouldn’t fund. The eco-industries need your support. With it, economies of scale will be reached and the price of natural products will come down as we perfect our systems and work more efficiently with nature. Know that something that seems to cost less now, will often cost much more in the future. Think ahead.

You are a citizen, not a consumer. You are powerful and can make a difference. Be responsible. Everything you do has an impact, make it a positive one.