Pricing, evaluation of profitability and guarantee policies

The same guarantee policies that apply to traditionally produced products also apply to circular economy products. Responsible purchasing of clothing is worth it, buy only when you actually need something, favour clothing with an ethical certificate or an eco-label, upcycle, borrow and recycle. When pricing and evaluating the profitability of a circular economy product, you must take the amount of work performed into account, from the purchasing of materials and possible washing and alterations to the design and manufacturing processes. The amount of work is always high relative to the price of the materials when making circular economy products.

A price is calculated for the product by taking all the manufacturing costs into account, starting from the purchasing of materials and ending in the finished product. Profitability is evaluated relative to the time spent and the calculated price of the product. In the manufacturing of a circular economy product, the purchase price of materials is often very low compared to the time spent on manufacturing, i.e. working time accounts for a high proportion of the price.

The price of a circular economy product is affected by the following factors:

  • the time spent obtaining the materials 
  • the purchasing price of the materials and supplies 
  • the preparation of the materials for reuse (cleaning and patterning) 
  • product design 
  • pattern making and cutting 
  • manufacturing the product 
  • other costs contributing to the manufacturing and sale of the product.
Photo: Paula Malleus-Lemettinen 

The guarantee policy should be taken into account as part of the branding. What type of message do you want to send to the buyer through the guarantee policy? For example, providing the product with a longer guarantee period than usual tells consumers about the product’s reliability and indicates that the manufacturer is prepared to stand behind the product. The guarantee can be implemented as a structural guarantee that covers all structural breakage but not any wear clearly resulting from use.