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Setting the right prices for effective climate protection
In its edition of February 19, 2018, Handelsblatt reports that Germany’s largest companies are advocating that CO2 emissions should be subjected to a better and more comprehensive pricing mechanism.
Pricing expert Prof. Hans-Christian-Riekhof sees this as a remarkable initiative. “One would actually expect proposals to be made by the state on how to properly tax or price emissions. But this presupposes that the authorities are dealing with the creation of effective emissions markets. And by the way, agriculture as well as the transport and heat sectors should also be included in such markets,” says Riekhof.
The determination of appropriate prices lies with the markets
“It is one of the economic truisms that markets are a pretty efficient mechanism for determining appropriate prices. Monitoring the functionality of these markets is more a task for authorities. If market participants are now calling for the creation of more efficient markets, this call should not go unheard.”
Pricing Expert Prof. Riekhof on Individualized Rates in Car Insurance
Individualized pricing is on the agenda of many companies, theoretically leading to the optimal exploitation of customers’ willingness to pay. In practice, however, this is not so easy to implement. All the more remarkable are the attempts by insurers to individually reflect personal driving behavior and the associated insurance risks with telematics tariffs (see the report in the Handelsblatt by Christian Schnell on 30.1.18). With these tariffs, insurers measure the driving style of their customers – how fast they drive, accelerate and brake. Up to 40 percent discount should be possible if you are willing to have your driving style digitally recorded.
The future of pricing?
Do we have to expect that prices will generally be further individualized in the future? “Yes and no”, says pricing expert Prof. Dr. Hans-Christian Riekhof from UNICconsult Strategy Development. “The increasing digital availability of relevant data makes it easier on the one hand to calculate the ‘optimal’ price based on algorithms. The other side of the coin is the acceptance of this type of price determination by the customer.” Anyone who may even have the unfounded feeling of being “taken for a ride” prefers providers who promise simple and transparent prices. “Let’s wait and see how the consumer will react. Some innovations need some time to really establish themselves in the market”, concludes Prof. Riekhof.
To the article in the Handelsblatt
Photo: www.pixabay.com
