How to get customers to pay more for ethical products
Ethical and sustainable ingredients, suppliers and packaging all cost more – meaning you’re always going to be at a disadvantage if you are trying to compete on price. So how can you convince customers to pay that little bit extra for products that are trying to do good?
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If you make ethical products, you will know that often means not just using the same mass-market ingredients that others use. You’ll know it’s about sourcing suppliers whose ethics and approach to business match your own, where they are doing as little harm as possible to the world and (in many cases) are actually looking to do good. And usually these things cost more. Plastic packaging is cheap and effective but stays around forever; you will be outlived by your toothbrush. If you want to use more ethical and sustainable packaging in your products then it’s going to cost you more. If you want to be sure that the oil you use in your products isn’t attributing to deforestation somewhere in the world then it’s probably going to cost you more for the ethical alternative.
It’s not just products. You might have a service-based business and making sure you are offsetting the climate impact of your company and finding time to support good causes and ethical practices all takes money out of your profits and time out of your working day – extra costs that your competitors might not have. If they just pay for the cheapest wholesale ingredients and don’t care about where those products have come from then either their retail price is going to be lower than yours or their profits higher. Either way, if you simply try to compete on price then you are always going to be at a disadvantage on price.
If you are the only company making your product, or if you are providing the only product that solves a customer’s problem, then price is secondary. The customer will be weighing up how much they are going to have to pay by how much they want that problem out of their life. But if you’re in a market where there are lots of ways for a customer to solve their problem, where there’s a lot of competition, then price is a real motivator for which product they are going to pick-up. But as consumers ourselves, we are constantly making ethical choices when we spend money. Which products we buy and which companies we support all dictates where money flows in the world. So how do we convince a customer that it’s worth spending that bit extra to buy ethically?
First of all, you have to remember that there is a market for every price point. A product is rarely too expensive; it’s more likely that it’s being pitched at the wrong customer or you haven’t effectively communicated the difference your customer will experience when your product solves their problem. Note that Apple’s iPhone continues to rise in price as more and more competitors enter the market with comparable products. So we know that people will pay more for a product even if there’s a cheaper option available, and before we get into the ethics of your product, that might actually be the angle you want to take. You might want to purposely position yourself as a premium brand or market yourself just to those customers who want to spend more because to them that means they are getting the best – your ethical approach might just be one part of you bringing the best possible product to market for your highly discerning customer.
However, if your mission is big enough or the change you are trying to make in the world is something that enough people believe in, then your whole business strategy should revolve around getting people to join you on that mission even if it costs more money. Take a look at toilet roll company Who Gives A Crap. Toilet roll is probably the most throw-away product there is in the world, it is literally designed to be a waste product and you can pick up toilet roll for 50p a roll if you buy a hefty multi-pack and don’t care too much about quality. But Who Gives a Crap sell their recycled toilet roll at a pound a roll. So why so expensive?
Well, actually, a pound a roll isn’t really that expensive, we’re just used to supermarket prices. Who Gives a Crap is made from 100% recycled paper meaning it doesn’t contribute to the 27,000 trees that are chopped down every day to make toilet paper. It’s eco-friendly and it doesn’t have any animal products in it – yes, many toilet rolls are not vegan can you believe! Standard (non-vegan) toilet roll uses gelatine in the glue that holds the sheets together. And because you buy direct from the company, they ensure that all their shipping and delivery is carbon-neutral.
But all that alone probably isn’t enough to make most people switch their toilet roll brand. It all makes for a nice ethos (and some might even say it’s a gimmick) but two and a half billion people in the world don’t have access to a toilet. That’s a third of the world’s population that doesn’t have the basic minimum level of humanity that many of us couldn’t imagine life without. It’s estimated that 800 children a day die due to diseases from lack of toilets and poor water sanitation, so what if I said you can do something about that by simply changing who you buy your toilet roll from? Because 50% of Who Gives A Crap’s profits go towards providing toilet facilities to those people in the world who don’t have basic sanitation. Who Gives A Crap are a B-Corp meaning that they hold themselves to higher scrutiny and transparency than a regular for-profit business. And, to date, they have been able to donate over five million pounds to providing toilet facilities and improving sanitation around the world (or ten million Australian dollars, with the business being originally founded in Australia).
To date, Who Gives A Crap have been able to donate over five million pounds to providing toilet facilities and improving sanitation around the world.
And this is important, not just their mission but from a business point of view: there are so many huge problems in the world that seem too big for us to do anything about as individuals. And what Who Gives A Crap are allowing us to do, as consumers, is to tackle these problems collectively by just switching a buying habit. Is Who Gives a Crap’s product toilet roll, or is it social and economic change? Which are we actually paying to buy? Have you even considered your environmental impact of buying toilet roll? But not only is the company helping you address that but it’s actually helping you to facilitate a bigger change in the world at the same time by doing nothing more than continuing to spending time in the toilet each day.
The reason mission-led businesses grow so fast is because any customers who believe in that mission tell others about it. Most people don’t find out about Who Gives A Crap from a TV advert or a promotion, they find out through their customers sharing them on social media all at zero cost of advertising to them. As ethical consumers, we are looking for companies to help us be more socially and environmentally conscious. But we’re also lazy, stressed and time-poor! It’s one reason why the vegan marketplace is expanding so quickly: many people see buying vegan products as a shortcut to being more environmentally sustainable even though they don’t identify as being vegan themselves. So if you provide an ethical product or service, your product is not just the thing you’re selling, your product is also allowing someone to act ethically without making an effort themselves – and that’s got value. If you can convince a customer about the extra impact that buying your product creates, the extra good in the world they are making happen simply by paying a little bit more (and then make them feel absolutely brilliant about it) then you’ve got a customer for life, even if you’re a bit more expensive.
So if you are getting feedback that your product is too expensive then ask yourself if you’re actually demonstrating why it costs more. Are you showing the customer what a difference it makes backing your product instead of a cheaper competitor? Are you showing that the product they are holding in their hand is actually only part of the thing they are buying? Are you showing the story behind the product and are you sharing your mission? When you visit Who Give’s A Crap’s website you see the mission first and the product second, and when you get your delivery there’s a message printed on every flap of the box about what you are enabling them to do with your patronage.
There are lots of companies in the vegan sector that customers support because we know that they’re bringing about the change we want to see in the world and we buy their products even though we can get similar products cheaper elsewhere. Viva La Vegan Clothing was founded by Jay Charlton and if you go to their social media pages you’re as likely to see photos of their delivery vans picking up waste food and delivering it to their local animal sanctuary as you are pictures of their products. Their clothes are all statement-based and designed to share the vegan message – and even though you might find your local supermarket selling t-shirts with vegan messages on during Veganuary at a third of the cost, Viva La Vegan retain a loyal following of customers who know that the company are working to bring about the change that they want to see in the world. And by allowing us to be their customer, they are letting us contribute to that.
So you need to make sure that your mission and your ethics are front and centre. It’s not enough just to have them as a bolt-on in the background because that makes you no different from the thousands of other companies all claiming green and ethical credentials. Go to the websites of the huge fossil fuel companies and you would think you’d landed on the homepage of an environmental campaigning group. You need to be able to prove what you say and then communicate that to your customers, through your social media, through the messages on your packaging, through your point of sale material, your advertising and through everything you do.
If you sell other people’s ethical products, so if you have a shop or online store, then you need to be able to convey their message to your customers too. Maybe you stock someone’s candles because they are the most ethically-made, cruelty-free candles you could find and the founder has an amazing story that set them on that ethical mission. It’s not enough to just put those candles on your shelf and hope a customer will understand all that and be happy to pay more. Make a sign explaining the brand’s story and pin it up next to the product, just like you get staff recommendations in your local bookshop. And if you are supplying your ethical products to be sold in retail, then create that poster yourself (or point-of-sale material as it is called in the trade) explaining your story so that the store can use it to tell more people about you and your mission. Use it to show the customers where their money will be going, what a difference they will be making in the world by choosing your ethical product and that it’s worth spending a bit more to do it.
But no matter how big your mission and how big the change you are making in the world, remember that you are still running a commercial business. You’re not simply asking for a donation, you’re delivering a product in return for that money. And the reality is, even if your product is going to cost more than your competition to allow you to deliver it in an ethical way, it still needs to be affordable. So you might choose to look at other ways to make your offer more affordable. First, if price stubbornly remains an issue then can you do anything to reduce the cost of your product without reducing the profits you make? Can you find someone who also makes a product using some of the same ingredients that you do and club together to buy them in bulk so that you can get them cheaper? You could even create your own small buying group of independent businesses so that you can place bigger orders for ingredients, packaging and even the consumables that your company uses so that you can negotiate better prices.
You need to make sure that your mission and your ethics are front and centre, not just a bolt-on in the background. You need to be able to prove what you say and then communicate that to your customers through everything you do.
Another strategy to convince people to pay that little bit more for your product is to look at how to make it more affordable without actually reducing the price they pay. Returning to Who Gives A Crap as our example again, dig a little deeper and you will find that their rolls are actually double the length of normal toilet rolls. One of their big costs is getting the product to you, so by making the rolls bigger they are able to give more value per unit: you get 400 sheets per roll rather than the 160 you might get from a supermarket brand, meaning that all of a sudden their product doesn’t look as expensive as you first thought. They also only sell in bulk, so if you buy a box of 48 rolls, then that £1 a roll comes down to 75 pence a roll.
And if you turn that order into a subscription (so they send you a new box full every 8, 12 or 16 weeks) then they’ll give you another £5-off as a one-off special offer. Soon, they are giving a potential customer all the tools they need to start rationalising the increase in cost and also allowing you to exchange your commitment to them in return for further savings. This is something that you see a lot of companies offering. If a one-off purchase doesn’t work out as being economical then how about getting the customer to commit to a bigger purchase that brings the cost per unit, per kilogram, per litre (or even hour of your time) down instead? You can look at setting up subscription services, pay as you go deals, payment plans, bulk buys, lease-hire and even offering invoice financing if your product has a large enough ticket price. There is a lot of innovation around payments and business models that you can investigate to switch how people pay and break down the costs – and many of them often result in your customers spending more with you in the long run.
Let’s have a bullet point recap of what we’ve just covered in this article:
- Sourcing ethical and sustainable ingredients, suppliers and packaging can all cost more. That means if you simply try to compete with your competitors on price then you’re always going to be at a disadvantage.
- Remember there is a market for every price point. A product is rarely too expensive, it’s more likely that it’s being pitched at the wrong customer or you haven’t effectively communicated the difference your customer will experience when your product solves their problem.
- As ethical consumers, we are looking for companies to help us be more socially and environmentally conscious. But we’re also lazy, stressed and time-poor. So if your company is doing all that on a customer’s behalf, then there’s a good chance they will be happy to spend more with you for the privilege.
- You need to put your ethics front and centre if that’s why your product costs more. Embrace them and make your mission your entire business and marketing strategy. When you do this, people who believe in your mission will start to share your company for you.
- If price continues to be an issue, you may want to find a way to reduce the cost of your product without reducing your profits or watering down your ethics. Can you club together with other companies to buy ingredients, supplies or even packaging in bulk so you can negotiate better prices?
- Or can you make your product offering better value for money? For example, giving the customer the opportunity to buy in bulk to get a better cost per unit or to take a subscription so they are committing to spending more over the long term for more manageable individual payments? And don’t forget all the different ways for people to buy that you can test, from pay as you go to invoice finance to make a product more affordable.
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