Do Higher Prices Always Mean Higher Quality? It Might, But Not Always for the Reason You Think

Price tag

Price plays a huge factor in consumer behavior. Expensive products are considered luxury goods that fewer people will want to or are capable of purchasing, while their less expensive counterparts are more affordable for the masses.

One common way price affects consumer behavior is through the belief that if Product A is more expensive than Product B, then Product A has better quality than Product B. Is this always the case? Sometimes, but not always. Here’s why.

Lack of Knowledge

Some consumers assume that quality always correlates to price. This can be true for a lot of instances: for example, a real luxury handbag is more expensive than a fake one because it’s made with high-quality products. But if you weren’t basing it on brands, you’d have nothing left to base quality on expect for price.

Let’s say I present you with two nearly identical leather handbags and ask you to choose which one is more expensive without giving any information about the two. Unless you have the uncommon ability to determine a real luxury handbag from a fake one, it’s unlikely you can tell the difference. But if I show you the prices and ask you to determine which has better quality, you’re more likely to say it’s the more expensive one.

A study from the University of Chicago Press found that when consumers are presented with the same type of product, they base the products’ quality off the price. This is because they assume that a product is expensive because it’s better quality. If they buy the cheaper one, they’re buying poorer quality that will easily break, thus they will have to buy a second one.

Premium Pricing

Companies are aware of how their consumers think, which is why many brands use this to their advantage through premium pricing. This is when a brand puts a higher price on its products compared to other brands because it gives the illusion of better quality compared to other products.

For example, take a look at smartphones. Currently, the most expensive iPhone is the iPhone 11 Pro Max, which costs $1,449 for a 512GB phone. Its main competitor, Samsung, has the Galaxy Note 10 Plus at $1,199 for a 512GB phone. However, look at its less popular competitors’ prices: LG’s latest smartphone, Velvet, is expected to sell for $700, while the Motorola One Hyper released earlier this year cost $399.

If pricing were an indication of quality, then that would mean that Apple and Samsung have better quality than all the other smartphones in the market. But if you remember Samsung’s exploding phones or Apple deliberately slowing down old iPhones, you know this isn’t always the case.

The Power of Pricing

What if I told you that I had an $80 lunch yesterday? You’d probably assume that I went to a fancy restaurant and ordered an expensive steak meal. But if I told you I had an $8 lunch, you’d probably think that I had a burger meal in McDonald’s.

Or, let’s say that you’re looking for a designer to make your wedding dress. The average wedding dress costs $1,631. You can find dresses for cheaper in department stores and consignment stores, but if you have a designer that claims to design over-the-top gowns for less then $300, you might start to sense red flags as the designer is promising so much for something less than the average price. Therefore, you might worry that the quality of the dress may not be as nice as you’d expect.

Luxury shopping

Pricing has become so associated with quality that the closer you put the price towards the lower end of the price range, the more you’re unsure of the value. Oddly enough, a study found that customers are most comfortable with products that are on the higher end of the price range because they associate it with quality just by the price alone.

While higher prices can be true for products made with higher-quality (read: more expensive) raw materials, a high price tag should not be an indication for consumers that something has better quality than those with lower prices. And in the same way, people shouldn’t be discouraged from buying low-cost items if it’s only a matter of preference.


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