One of the topics that continuously comes to my mind during this course is the complexity of pricing that socially responsible companies have to deal with is much higher than that for traditional businesses. This issue is twofold:
1)While the profit-maximising theory suggests to exploit the customer's willingness to pay, i wonder if there's upper bounds to this argument for companies that adhere to a socially responsible mission. In other words, is there an ethics of pricing that social enterprises should explore by the virtue of being ethical businesses?
2) Another decision to be made is how much premium can you expect your customers to pay? Analysis of competitors pricing can be one's starting point, but arriving at the optimal pricing level seems like a very complex task. A recent article in MIT Sloan Management Innovation review that talks about different tests that were taken to assess consumers willingness to pay for "ethical" products:
http://sloanreview.mit.edu/x/?url=http://sloanreview.mit.edu//wsj/insight/brand/2008/05/12/&type=email2friend&title=Does+Being+Ethical+Pay%3F%2C+By+Remi+Trudel+and+June+Cotte+-+MIT+Sloan+Management+Review&src=text
3) Thirdly, is there a balance between fulfilling a social mission and running inefficient businesses? For instance, if Amerian Apparel pays premium wages to workers in the US as opposed to outsourcing labor to lower cost geographies, thus acting against market forces, does it make it an ethical business? and as consumers, should we be paying for potential inefficiencies of these business decisions?
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