Would You Pay More to Go Green?

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As I've written in this blog previously, I believe the "green premium" works against green businesses, limiting their growth and thus their collective impact on sustainability. I think that all green producers should cut costs and focus on volume to offset their lower margins.

I can't tell you how many times I've heard someone citing marketing research that concludes consumers are willing to pay more for a green product. Clearly, people are wiling to pay more for what they perceive as a better product (people pay more for luxury cars, nicer homes, better wine, and organics). Many companies that produce green products and charge a "green premium" are viable and growing, though I know of none that are as large as conventional competitors. Yes, retailer Whole Foods Market always seems to be doing a booming business, but it represents a small share of overall retail business and the products sold at Whole Foods Market are limited to certain personal categories where people may be more willing to pay a green premium than generally.

Do me a favor. In the next week, or even better, next month, watch your purchasing decisions. How often do you pay more for something that you perceive to be green? How high a premium do you believe you pay, and in what categories are you more or less likely to accept a green premium? Has your attitude about paying a premium for green changed as the economy has declined? I'd be grateful for any observations and insights.

Tom Szaky is the founder of TerraCycle, a New Jersey based company that makes fertilizer using worms and produces retail products from recycled goods. The firm was started while he was a student at Princeton University. Tom was named "The No. 1 CEO Under Thirty" by Inc. magazine in its July 2006 issue.