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Does Higher Price Raise Perception Of Quality? By Joe Crisara

November 18, 2011 at 12:56pm Tags: , ,

Consumer Shortcuts

Let’s face facts.  Most of us take shortcuts when making a purchase that we are unfamiliar with.  For example when we buy a flat screen television, new car or purchase a service we rarely use turn to price and reputation as a “shortcut” to tell ourselves about the quality of what we are purchasing. For instance if i said I was selling a car for $95,000 most people would envision a Mercedes Benz or Lexus loaded with all the trimmings.

Does this same effect happen when people buy hvac, plumbing and electrical service fron our company.  Well I guess that depends on how your company positions itself in the market. Are you perceived as high end or a budget?

Price/Quality Relationship

In an article in the January, 2008 Economist magazine, a study was cited that was done by Dr. Antonio Rangel of the California Institute of Technology. Rangel found that if people are told that a wine that they are tasting is expensive, the perception in their brain evolves to increase the quality of the wine they had consumed based on nothing other than higher price meaning higher quality.

Dr. Rangel gave his volunteers sips of what he said were five different wines made from cabernet sauvignon grapes, priced at between $5 and $90 a bottle. He told each of them the price of the wine in question as he did so. Except – of course – that he was fibbing. He actually used only three wines. He served two of the same wines twice at different prices.

Take a Sip

When asked which glass tasted better, they chose the higher priced one rather than the cheaper one. However, this was only their opinion. How do we really know if the brain has perceived a higher quality? As stated in the aforementioned article, Dr Rangel came to a conclusion by scanning the brains of 20 volunteers, while giving them sips of wine.

He used a trick called functional magnetic-resonance imaging, which can detect changes in the blood flow in the parts of the brain that correspond to increased mental activity. He looked, in particular, at the activity of the medial orbitofrontal cortex. This is an area of the brain that previous experiments have shown is responsible for registering pleasant experiences.

The Results Are In

The results of the study showed that the parts of the brain associated with pleasure were stimulated more by the wines thought to be higher priced. (Remember, they were actually the same wines.) This wasn’t just novice wine drinkers that made this judgment. Experienced wine connoisseurs were tested as well.

I think many of us have instinctively known this for years. But, in this study, it is proven science. Essentially, the finding was that higher prices have a real impact on perceived quality (which will then influence sales) rather than people just saying they think it’s better (which will not have an influence).

My interpretation of this study is that it shows that lacking hard definitive information about the quality of a product or service, the consumer searches for other sources of information to determine the quality of one thing over another. In this case, the price of the product itself created the real perception of higher quality.  Are you a quality contractor? If so, price yourself like one.

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5 Responses to “Does Higher Price Raise Perception Of Quality?”

  1. GreenleafMechanical said...

    This experiment tells all tales!

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  3. Creative Custom Construction said...

    I believe the quality of What I build and how it is built means a lot. Some would v say that I am a perfectionist. At the same time it might take longer for better quality as well. I am straight upfront and honest with my customers about cost of the project. Some are shocked about the cost of some of the materials. At the same time want the higher quality products t g at are made better and last longer. I will show them the difference between the lower cost products compared with the lower cost products. In the long run it does make a difference in the quality an the price.

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