The correct price or the fair price? A quali-quantitative analysis of the formation of price for energy retrofit works in the residential sector in France

Abstract : This paper tackles the crucial issue of price structure in the energy retrofit market of the private residential sector. It is based on a quantitative study of retrofit prices in France (1,000+ invoices) and a qualitative sociological survey of installers (25 open-ended interviews). We show a strong dispersion of prices within single retrofit-work categories (e.g. boiler, insulation). Half of the dispersion is explained by technical and economic reasons (brand and quality of product, housing size, type of company, discount…). This means that from a technical standpoint, the price is correct. Other components of the price are revealed by the qualitative survey. On the customer side, the refurbishment market is marked by a strong uncertainty. It is technically complex and there is a concern about poor workmanship, hence the role of reputation and trust. These are factored in the price as a " confidence premium " which makes the price fair from the customers' point of view. On the installer side, the price is formed at the crossroads of three characteristics: the perception of the household willingness to pay, the management practices of the company (profit margin calculation, load plan) and an adjustment to current local market prices. The fair price from the installer point of view is the price that allows his company to survive or make profit and to win new contracts. However, a determining factor of the price lies in the installer's recommendation of exactly which work to do and with which material or equipment. For a given energy performance, several technical solutions exist that impact the final price. To conclude, we note that observed prices may differ from the technically " correct " price but this doesn't mean that prices are inaccurate. Prices incorporate qualitative dimensions such as the accessibility of the site or the work quality of the company (being on-schedule, cleanliness of the work, etc.) that make them " fair " in practice. As a policy consequence, rather than a direct intervention on prices which is complex, governmental action might focus on standardizing the presentation of quotation, craftsmen company management and on assisting customers in their choices.
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Dernière modification le : vendredi 21 décembre 2018 - 11:08:06
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  • HAL Id : hal-01826167, version 1

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Dominique Osso, Catherine Grandclément, Aurélie Tricoire, Marie-Hélène Laurent, Stanislas Nösperger. The correct price or the fair price? A quali-quantitative analysis of the formation of price for energy retrofit works in the residential sector in France. 2018 International Energy Policy & Programme Evaluation Conference, Jun 2018, Vienne, Austria. ⟨hal-01826167⟩

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