In art college, we learned about price-quality relationship
Price Quality Relationship
pricing is a strong psychological component which can manipulate customer’s decision making. Keep the pricing high, and the customer will think that the quality must be high too. This expectation of the customer is because he wants to receive value for his money. So when he is paying more money, he is expecting more value. And you are better off giving him a high-quality product.
On the other hand, if your product is high quality, and you are keeping the price low, the customer might not see the value in the product. He might think that he is paying so less for the product. Then, is the product up to mark? Will the quality be high when the price is so low? That, my friends, is the problem with a price-quality relationship.
Our marketing class had access to a week with a Ralph Lauren Polo store, they set up a corner of the store called "Featured Designer". We called ourselves EVOLVE. Ralph Lauren provided us with blank t-shirts and we were to design and price them.
We designed these cool minimal design type shirts and after a week we had a full line of shirts ready to sell. We decided on a price of $30 and waiting until the end of the day to see how it went. We didn't do too well, we sold 5 shirts.
I told the team to triple the price and see what would happen. I wanted to manipulate the customer's psychology into thinking this EVOLVE line was for the big players, $90 for a shirt surely must mean something right? Perhaps art?
We couldn't believe how fast these shirts were being sold, I had to make a call to our guys in the print shop to print as many they could.
This translate in beat sales as well. You never want to go too low in pricing. Raising your prices will send the customer a message that you're not desperate for money and that you value your work. This idea coupled with this approach is a solid one.
Overall, each and every company out there is daily trying to improve their quality at an optimum price. Some have been able to do that & they are getting a higher pull from the market. Others have not been able to balance price and quality which has resulted in the brand being forgotten and a competition brand being adopted in their place.