Price and perceived quality

Customers often decide whether a price is fair by comparing it with what the product appears to offer. That impression is the perceived quality of the product, and a price that does not fit it makes customers suspicious or unwilling to buy. Price must therefore be consistent with perceived quality.

How customers judge value

Before you buy, you cannot test the product, so you read clues about its quality. The design, the materials used, the features, the packaging and the brand name all add up to an idea of how good the product is. You then weigh that idea against the price. If the two fit together, the price feels fair and you are more likely to buy.

A worked example

A small business sells steel water bottles that keep drinks cold for 24 hours. The bottles are sturdy, well finished and boxed neatly. Priced at £34, they sell steadily, because the price matches the tough, long-lasting product customers can see. If the same bottles were priced at £8.99, shoppers would assume the 24-hour claim was exaggerated and the steel was thin, even though nothing about the bottle had changed. A flimsy bottle priced at £34 would be poor value, and most shoppers would leave it on the shelf. A high price on its own does not make a product look premium; it only works when the product looks worth it.