A fair price is a calculation approach that makes hidden costs behind a product, material, service or value chain visible. The market price shows what is paid at checkout or on an invoice. The social price also shows costs for people, nature and society: CO2 emissions, air pollution, water use, biodiversity loss, health damage, underpayment or waste. A fair price is not a moral judgement, but a way to make hidden social costs visible and comparable. This helps substantiate choices in procurement, design, product development and policy.
Market price, social price and external costs
The market price mainly covers direct costs such as labour, materials, production, transport, margin and tax. Many effects on climate, health, nature and society are not fully included. These effects are called external costs. The social price consists of the market price plus a substantiated valuation of those external costs. In practice, it serves as decision information, not automatically as a new consumer price tag.
Which hidden social costs become visible?
- Environmental costs — CO2 emissions, water and air pollution, land use and biodiversity loss.
- Social costs — underpayment, unsafe labour and health damage in the value chain.
- Value-chain effects — costs at suppliers, often in scope 3 of the footprint.
Shadow prices: valuing effects in euros
A shadow price expresses a social effect in euros when that effect has no regular market price, but does represent real value or damage: one tonne of CO2, air pollution, health effects, water use or biodiversity loss. Shadow prices are used in social cost-benefit analysis (MKBA), policy assessment, sustainable investment and impact research.
Eco-cost analysis for products and materials
Eco-cost analysis makes environmental damage visible from the perspective of the costs needed to prevent or limit that damage. This is especially useful for products, materials, design choices and value retention. New Economy uses eco-cost analysis to compare alternatives and show where the largest impact occurs in a product or value chain.
How New Economy calculates
New Economy works with a combination of public standards, data sources and calculation models. Depending on the question, this includes the GHG Protocol, GHGP databases, public emission factors, eco-cost analysis, Idemat, life-cycle assessment (LCA), Environmental Product Declarations, CE Delft environmental prices, social cost-benefit analysis (MKBA) shadow prices, CO2 prices and proprietary calculation models. The outcome is usually not an absolute number, but a substantiated indication or range, with explicit assumptions, sources and uncertainties.
Transparency about sources and calculation models
Public data sources, calculation steps, assumptions and proprietary calculation models are made public where possible. This helps clients, partners and other parties check, improve and reuse calculations. Not everything can be public: licensed source data, confidential client data, privacy-sensitive information and paid datasets are not republished. However, the source used, relevant version and role of the source in the calculation are stated where possible. More context is available on Methods and sources and Open calculation models.
From making damage visible to regenerative value
A fair price shows where damage occurs. Regenerative work goes further and also focuses on repair, strengthening and positive value. New Economy therefore combines social price calculations with design, strategy, social cost-benefit analysis (MKBA), business development and concrete implementation plans.
Frequently asked questions about a fair price
A fair price makes the environmental and social costs behind a product, service, material or value chain visible. These costs are not fully included in the market price, such as CO₂ emissions, air pollution, water use, biodiversity loss, health damage or social costs.
The market price is the price paid in the market. The social price takes a wider view and includes external costs. This creates better insight into the consequences of a choice, product or value chain.
A shadow price is a calculation value that expresses social effects in euros. This is needed when effects have no regular market price, but do represent social damage or value.
Usually not. A fair price calculation is often a substantiated indication or range. Quality depends on available data, chosen scope, sources and assumptions.
Depending on the question, sources include the GHG Protocol, GHGP databases, public emission factors, eco-cost analysis, Idemat, life-cycle assessment (LCA) data, Environmental Product Declarations, CE Delft environmental prices, social cost-benefit analysis (MKBA) shadow prices, CO₂ prices and proprietary calculation models.
New Economy publishes public source references, assumptions, calculation steps, model versions and ranges where possible. Licensed source data, confidential client data and privacy-sensitive information are not republished.
To map the social price of a product, material or value chain, see Social cost-benefit analysis (MKBA) for companies or Product Footprint, or contact New Economy about the options.