Going Green

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I was recently talking to a developer, an estimator for a General Contractor and an engineer with a utility company. We got talking about sustainability and “going green” after seeing an ad for the new 30% tax credit for certain “green” windows. In a business environment that has always and continues to require a high profit to remain in business, “going green” does not always make the most business sense. In fact, environmentally friendly issues aside, the only good “going green” does for a business is Marketing successes. Don’t get me wrong, I support environment assistance, recycling and the “going green” idea. But, it does not make business sense.
Think about a builder who buys more expensive energy star rated appliances, more expensive windows that will allow more heat in during the winter or any other more expensive product or procedure for building that would be considered “green.” When the competition buys less expensive products that are not “green” they are able to charge less for the same building or house. Whereas, the “green” builder who put more expensive “green” extras into his product, has to charge more than the non-green competition to make a profit.
The benefit of “going green” is that the company will be helping the environment which is great but might run them out of business. Everyone sees the HGTV Green Home and watches the commercials that support “Going Green” but are they willing to pay more these green products. Same as the companies that are paying more green , individuals need to pay more green too.
My question is, are there enough people out there who will pay more environmentally friendly products. With the craze of “going green” obviously some companies do. Plus, the government is supporting environment sustainability which helps defer the costs of “green” products. With these factors in mind, the companies that are “going green” are able to market their product as “green” and attract those people who are willing to pay more or willing to go through the extra government steps to purchase a “green” home or product. Still, there is always a risk that your “going green” costs won’t be profitable enough because the “green” marketing campaigns won’t attract enough people solely on the differentiation that is “going green.”

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Comments

  1. I understand your concern with the extra cost for green products. I think it is up to individual companies to research their market to determine if there is a need for green products. I believe that there is a growing need in many markets for eco-friendly products.

    Looking at the total cost of ownership rather than the initial price of a product helps people make buying decisions in regards to green products.

    While a “green” window may cost more at first, the energy savings over time will be worth the initial investment.

    Also these green products will go down in price as demand increases. With demand comes competition and a lowering of price.

    Great question to raise, I enjoyed the article.

  2. Nice blog! Keep up the good work.

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  1. [...] 2009-07-14T05:55:32  Going Green « Dr. Scott's Cool Business Blog: I was recently talking to a developer, an estimator for a Gene.. [link to post] [...]

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