According to the Journal of Consumer Research, a high price indicates either bad value or good quality, whereas a low price indicates either good value or poor quality.

At the heart of this dichotomy is the role that quality plays in both the actual and perceived price of the product. To understand how quality plays a critical role in pricing, one must look at the stakeholders affecting the price in manufacturing.

A proper focus on pricing must take into account customers’ perceived value of the product and what they believe that value is worth, i.e., what they are willing to pay for it. Without this, engineering and marketing team members are left to develop pricing from a bottoms-up, cost-plus approach: How much are the raw materials, cost of assembly, cost of delivery, and so forth? Often, marketing simply tacks on a percentage of profit to the order to establish the price. For them the calculation is simple math that ensures they will hit margin goals. However, they are not the folks in the field convincing customers to buy. Nor is the engineering team listening to customers’ objections or value perceptions. 

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