Does Price Really Influence Our Perception of Quality?

Does Price Really Influence Our Perception of Quality?

According to the experiment conducted by the television show "Brain Games", the answer is YES!

Prices are often used as an indicator of quality in cases where it is difficult for the customer to determine the actual physical quality of the product or service. As seen in the experiment, participants were given two samples of cake, both made with the same ingredients and baked in the same oven. The trick was that they were told the cakes were different; one being priced relatively cheaper and the other relatively expensive. When given the opportunity to test both cakes, all the participants unanimously concluded that the more expensive cake was the one of higher quality (essentially, the cake that tasted the best).

The reason?

Price conveys a psychological message related to value: things that cost more are assumed to be of better quality. The participants automatically assumed that because the cake had a higher price tag, this would automatically mean that more expensive raw materials were used to create it, overall, making it of higher quality.

What does this mean for businesses and brands?

Consumers can’t individually judge all the products in each category. Therefore, price becomes the indicator for which brands are of higher or lower value.

So, if you want to position your brand as a ‘luxury’ or ‘premium’ brand in the product / service category for the market you serve, then your pricing structure will have to reflect same.