Higher price equals good quality

What is the definition of a good product? Where do you buy it? Is it expensive or not? These are good questions to consider before buying. Especially when you’re having a tough task making a decision whether to take the cheaper one or the expensive one.

People often think that expensive products have a better quality than lower cost products. Sometimes it’s true but I can guarantee that’s not the case every time. Companies make huge profits with “luxury” products because we are a bit dumb and buy these products. For example, in perfume or handbag industry the products they make are quite cheap to manufacture but when these products are transported to stores the price tag on them rises vastly. Especially if your purse is manufactured by a famous brand. Another good example is the “Apple people” who buy those expensive phones and laptops no matter what. Someone could ask, is that worth it?

So what is the reason people think that high price means high quality? I found an article that said the reason is that people simply don’t have enough information about the product. So their mind tells them that the expensive product must have a better quality than the cheaper one. “Why would it be so expensive in the first place?” People are somehow afraid to buy a lower-cost product because they fear that they will have to buy another one because the cheaper one is going to break soon. It seems that people have tough time understanding that a cheaper product can have at the same time a good price and a good quality.

So how companies use this knowledge as an advantage? The answer is, premium pricing. Shortly it means that a company puts a higher price on a product and expects customers to think it’s somehow better than the other ones on the market (better quality or reputation). For example, Apple uses this kind of pricing as a marketing tool. Also many different clothing (Louis Vuitton) and car companies (Rolls-Royce) use this as an advantage.

In my opinion it is an odd and naïve way to think that high price equals good quality. We have learned to think that expensive price means good quality. And at the same time low cost means low quality but it also means good value for the customers. I think it’s a good idea to think before you buy and do some research about the product you are going to buy.  That can occasionally save you some money.

lataus

Source:

http://www.press.uchicago.edu/pressReleases/2012/October/1210Deval.html

http://www.economicshelp.org/blog/glossary/premium-pricing/

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4 Responses to Higher price equals good quality

  1. gurvinderpaul says:

    Nice post Samuli as you’ve always posted!

    The subject of your blog is relevant and I have thought about it often. I can agree on you that even if the price could be higher it doesn’t always mean that the quality would be matching to the price.

    I also agree that many (luxurious) brands are making benefit from their pricing methods.

    Overall you’ve here a good blog with interesting views and examples.

  2. tiinai47 says:

    Good post! and so True. As I have worked in the center of Helsinki, purchasing the needed products there, have noticed that the higher price clothes and bags are often on sale quite soon after coming to the market. I couldn’t be happier to buy a bag with Guess mark for only 125 euros. Suggest for everybody to look over prices!

  3. joniruo says:

    Very nice post!
    It’s true that people have these kinds of beliefs considering cheap vs. expensive products. I don’t understand why spend so much money on something just because its luxury brand..
    So I agree with you to think it as a naive way to think. People should check quality of the product rather than buying it blindly.

  4. rozaomar says:

    Great post and a great subject.

    I have to admit that sometimes I fall for that. That made your blog post fun to read because I found myself in almost every part of it. Of course I know that higher price don’t always equal higher quality but sometimes it does. For example if I’m buying a white t-shirt I would probably buy the cheapest one there is. But if I’m buying a foundation instead, I would consider buying more expensive one.

    You have really great points on your blog and this probably makes all of it’s readers to think about their purchases. Good job! 🙂

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