Price vs quality

This page is also available in: Italiano (Italian)

Price vs quality — How to decide?

(Estimated reading time: 2 min, 16 sec)

Conference by Magalì Fia. Faculty of Social Sciences of the University of Trento. October 13, 2018. “Common Mistakes in Everyday Decisions — from Misunderstandings to Reality.” Part 2: Price vs. Quality.

Stop sabotaging your decisions!

In the previous part entitled “Economics and introspection”, we said that introspective economics allows us to examine the desirability of our choices.

Applied to individual choices, it helps us decide the price we are willing to pay for the quality we receive. It brings us back to our purpose.

How does economics help in purchasing decisions (buyer’s decision process)?

Conference by Magalì Fia at the University of Trent on purchasing decisions - price vs quality
Conference by Magalì Fia at the University of Trento. Photo by Chiara Andreatta.

It helps to find a balance between price and quality. So we don’t put too much emphasis on appearance.

But let’s see how economics can help us in buyer’s decision process. We’ll show how, if we don’t balance price and quality, we run the risk of over-emphasizing appearance and acting absurdly.

Eye-catching products

Let’s look at a few marketing techniques. They are used to promoting products. We will see how the packaging and positioning of the product attracts the customer.

Many companies master these skills, and the others remain at a disadvantage.

These techniques make the product more attractive. But a beautiful look does not always mean outstanding quality.

If the appearance of the product catches you, and you look more at the packaging than at the quality, you can have an unpleasant experience.

This happened to me last year during the Christmas season. I went out to buy chocolate to share with friends and family during the holidays. I bought an elegant chocolate composition and paid a high price for it.

But when I got home, I tasted it and realized that it did not taste good. I was angry because I wanted some good chocolate to eat with my friends and I got something that looked more like a “wooden sculpture”. It was edible, but not of quality.

Box of chocolates.
Source: Leonardo AI

How could I have avoided such a mistake?

What is my goal?

I could have stopped for a second, looked inside, and asked myself, “What is my goal?” To buy a quality product or a flashly product? The goal I had was to buy chocolate to eat with friends and enjoy with them. I would rather not enjoy the beauty of a chocolate composition with them. The “lack of introspection” in purchasing decisions — not realizing one’s goal — has a cost: looking only at the form can lead to a terrible experience.

You may ask yourself: is my goal to buy something good or to get a nice product package?

People who choose quality follow an economic principle.

They evaluate the relationship between price and quality based on the goal they want to achieve.

Business Purchasing decisions

Entrepreneurs often overlook the relationship between price and quality. This can make it difficult to sell their products.

If I am a business owner and have a restaurant — that serves wonderful food at an average price. — I should make my purchase decisions with this goal in mind: to provide an excellent product at an honest price.

If my supplier offers me a great product — say, a special kind of meat — at an unreasonable price, I know my customers won’t choose it.

Business owners should make purchase decisions based on their goals. A product that is too low or too high in quality may be difficult to sell.

Restaurant — dining room.
Source: Leonardo AI

Magalì Fia

See also:

Introspective Economy