Price-quality heuristic
When quality is hard to judge, people read a higher price as higher quality.
Where it applies
Two of the eight page areas.
How to use it
Three ways to put it to work.
- Don’t under-price premium lines, particularly where quality is hard to judge before buying and category prices vary widely.
- Back the price with other quality cues, such as reviews, materials and guarantees.
- Use deep discounts sparingly on premium ranges.
What the research found
Price raises perceived quality, but a later meta-analysis found the effect has weakened.
The effect is weaker for services, durable goods and shoppers who know the product.
A meta-analysis of 36 studies found a moderately large effect of price on perceived quality; a later one found it had weakened, and was weaker for services, durable goods and shoppers who knew the product. At a winery, a moderate price rise lifted sales of a good wine but cut sales of a poorer one. Evidence that discounts make products work worse came from small lab studies.
Key research
Five sources, each checked.
Last reviewed
Rao & Monroe (1989)Meta-analysis The Effect of Price, Brand Name, and Store Name on Buyers' Perceptions of Product Quality: An Integrative Review J. Marketing Research Read the source Völckner & Hofmann (2007)Meta-analysis The price-perceived quality relationship: A meta-analytic review and assessment of its determinants Marketing Letters Read the source Shiv, Carmon & Ariely (2005) Placebo Effects of Marketing Actions: Consumers May Get What They Pay For J. Marketing Research Read the source Gneezy, Gneezy & Lauga (2014) A Reference-Dependent Model of the Price–Quality Heuristic J. Marketing Research Read the source Plassmann, O'Doherty, Shiv & Rangel (2008) Marketing actions can modulate neural representations of experienced pleasantness PNAS Read the source