Charge now for Future Costs
When I bought a laptop in Switzerland, I noticed something interesting. Part of the price included a tax for recycling. So, when that laptop eventually dies, I can take it back to any electronics store, and they handle the recycling. No extra charge. Of course, it makes the laptop I buy more expensive at the time I buy it. It includes more of the real cost of the laptop.
Imagine if we did this for services. What if our prices covered all future costs, including environmental and societal costs that would happen in the future? It'd make services more expensive upfront, sure. But it also makes the true cost of the service visible right now.
Take transportation in Europe as an example. The real cost of travel isn’t reflected in ticket prices. Aviation fuel is subsidized by governments, making flights cheaper than trains between big cities. If flight tickets showed the real price, they would be so much more expensive that a good old train ticket.
Action question
Which parts of your service do not reflect the real price and the real cost it has on the world?
Daniele's notes
This is the first shitty draft of this principle
This principle might one day make it in the fifth book in the "Service Design Principles" series that explores how to better serve humans and the planet.
If you're curious about service design principles, you can get the four previous books in the series, with proofread principles and less grammatical creativity.
Written with AI help: This principle draft is based on an audio note I took while walking that was transcribed and cleaned using Audiopen. I then reviewed and improved the text by hand.
This is an interesting pricing model, Daniele!
I think this can work when the brand aligns with the charge. We have this in Canada; 10 cents is added to the cost of any item that comes in a recyclable container. It can be recovered if you take the empty bottle or can to a recycling depot. This is part of living in Canada, so it has become a social norm that I accept. Also, it reassures me that provisions are made to provide proper disposal of the item once I am finished with it, and reinforces the need to place it in my recycling bin.
However, when an airline charges me for Airport fees, I am left scratching my head by what feels like an artifact of greed. Are airlines not able to figure out how to pay their own expenses? I get that it is likely some form of transparency. But let's flip the script to demonstrate how ridiculous it seems to me. Say I provided a service and then said, "Here is my invoice, and I have made it transparent the fees for my utilities, internet, telephone, and rent as we had a Zoom meeting, several telephone calls, and you spent 5 minutes in the office". For me, this creates frustration as the only expectation of cost not seen upfront would be taxes.
On the flipside, I love the concept of all-inclusive pricing, a similar but not the same pricing model, as it shows that the company cares about delivering an experience/outcomes rather than outputs, and removing the concern of future payments. Common examples are Cruises, theme parks, and retirement living. Thus, if all the costs had been listed for the whole trip upfront, I would have been overwhelmed, lost, and left wondering if the price is worth the value.
A third example in favour of this model would be an add-on subscription service for me to have a product maintained or experience more options. Examples would be a subscription service for all maintenance and repairs for my home's HVAC system, when I get a new one installed. This creates a feeling of peace of mind for me. Or a subscription service for additional features of a kids' toy. The reason I like these examples, and would gladly pay for a one or even multi-year subscription all upfront, this allows me to see myself as informed and prepared, plus often the cost of the additional subscription is often dwarfed by the cost of the big product purchase, so why not!
In other words, I don't want to know about every fee it takes in the short- or long-term, to take me on an experience (e.g. a cruise); I just want to know the round-trip cost to my front door. But, if you are adding on value related to a large purchase, related to the product (additional features or services), or future for the lifecycle of the product, I am in, as long as the cost is small compared to the purchase I thought I would be making. Thus, I believe it needs to feel like there is added value in seeing the cost as a separate line item, either alignment of my needs or the brand of the organization, otherwise it feels like an artifact of greed.