In an era of sustainability and social responsibility, more and more companies, such as Tony Chocolony and FairPhone, are embracing the concept of true pricing. True pricing is an innovative approach in which the true cost of a product or service - including hidden environmental and social costs - is factored into the selling price.
True pricing transparently and ethically helps create stronger brand equity and customer loyalty. However, implementing true pricing in an effective way is essential to creating this.
Here you can read about the steps an organization can take to apply true pricing effectively.
Step 1: Identify External Costs
The first step in true pricing is to identify and quantify the external costs associated with the production and distribution of products. This includes environmental impacts such as CO2 emissions, water use and pollution, as well as social costs such as working conditions and fair wages. For controllers, it is important to get the definition of these external costs straight - what is included and what is not.
Step 2: Integrate Costs into Pricing.
Once these costs are identified, they must be reflected in the price of products. This requires careful consideration to ensure that prices remain acceptable to consumers. Here, controllers work closely with marketing and sales departments to develop strategies that transparently communicate increased costs.
Step 3: Communication and Transparency
Transparency is essential in true pricing. Consumers need to understand why products can be more expensive and how these additional costs contribute to a more sustainable and more just world. Controllers can help create clear, understandable reports and explain the true pricing components well.
Step 4: Monitoring and Reporting
True pricing is an ongoing process. Controllers must establish systems for regularly monitoring and reporting the economic impact of true pricing. This includes analyzing sales data, consumer feedback and market trends to ensure the pricing strategy remains feasible and achieves desired goals.
Step 5: Adaptation and Innovation
Based on the data collected, controllers can recommend adjustments in strategy. This may mean changing the way costs are passed on or investing in technologies and processes that reduce external costs. By constantly innovating and improving, an organization can refine and optimize its true pricing strategy.
Conclusion
True pricing offers organizations a powerful way to take responsibility for their environmental and social impact. From a controller's perspective, this approach not only provides an opportunity to meet growing consumer demand for transparency and ethics, but also strengthens the organization's long-term financial and operational performance. Through careful management and innovative strategies, true pricing can contribute to more sustainable and ethical operations.
With true pricing you make a statement: you show that as an organization you are willing to look beyond profit, and actively contribute to a better world. It is an investment in the future, for both your company and society.
