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Your take: Does a high price make you think it’s better?

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Do people love Dom Perignon because it tastes good, or because they think higher price, better quality?The other day I was shopping for some new earbuds online and I saw a Panasonic pair with 4 1/2 stars and tons of glowing reviews. I haven’t bought Panasonic anything in years, and the price was only $7, so I ignored the good reviews and looked elsewhere, finally settling on a well-reviewed but slightly more expensive pair from Sennheiser.

The pair I ended up with were ok, but I haven’t been blown away, so imagine my chagrin when I saw a very similar Panasonic pair win in a showdown of 40 different pairs of earbuds, many costing substantially more.

So, in the end, I passed up a very good deal on a pair of headphones because the price was too low, assuming there was some kind of flaw I didn’t know about and was too lazy to investigate. That’s pretty stupid, but it turns out I’m very much not alone in judging products by its price.

My dad used to work for a software company that made industrial modeling software and then use it to create industrial simulations to help companies make their operations more efficient. At first, they were unsuccessful at getting corporate clients to sign on, until one day a high-level contact at a company pulled him aside and said, “I can’t sell this to my bosses; the price is too low. Can you raise it?”

They did, and sales went up!

There’s actually lots of research that shows people inherently judge items to be better the more expensive they are, especially items where quality is subjective and hard to judge, such as cigars, wine and audio equipment. After all, a pair of headphones that I think sound amazing may sound like total crap to you, and vice versa, so if we can’t listen to the headphones, and the opinions of others don’t seem to predict whether I’ll like them or not, the only thing that’s left is brand and price.

This effect is so powerful that increasing the price of something can actually make your brain experience it as more pleasurable. In 2008, scientists at Stanford decided to mess with subjects by putting a way-too-low price on an expensive bottle of wine and a way-too-high price on a cheap bottle of wine.

After looking at the price tags, brain scans seemed to show participants enjoying the cheap wine way more once you slapped a $45 price tag on it, and enjoying the expensive wine way less when you slapped a $10 price on it! I can only imagine how entertaining it must have been to tell the test subjects how easily they’d been manipulated; hopefully they were drunk enough not to feel too bad about it.

That’s why careful research done by organizations like Consumers Union is so important. Absent real, reliable data gathered by a disinterested party, the human mind is going to make all kinds of idiotic judgments about quality based on price and other factors that are irrelevant to actual quality.

So what I’m interested in hearing is, do you judge items based on price? Do you have basic rules like “never buy the cheapest one”? When is a high price better? Spill it!

{ 16 comments, please add your thoughts now! }

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16 Responses to “Your take: Does a high price make you think it’s better?”

  1. Texas Wahoo says:

    For something like wine, where I couldn’t tell the difference between a great bottle and a cheap bottle, I will generally buy something in the middle. That is in part because I do not want to serve guests who know more about wine the cheapest wine.

    • Steve B says:

      You want a fruity wine get Riunite Lambrusco and the Riunite White wine is fine too. Now if you like dry wine there are many more choices like Chardonnay, Chablet and cabarnet. But you should never pay more than $20 for a liter bottle of wine. I get Riuite Lambrusco 3 liters for $11.

  2. Mike says:

    Very simple, always buy Sony electronics.

  3. Brandon Duncombe says:

    @Mike

    I would’ve agreed with that statement in the mid 90s. Since then, other companies have caught up (Samsung, Panasonic, etc).

  4. This is a thought provoking idea, Claes. I wrote about a similar idea a while back, debating the notion of “you get what you pay for”. That adage hinges on the idea of price being representative of quality. As you noted, that is not always the case. In fact, the very practice of negotiation illustrates that price is fluid, and therefore can’t perfectly correlate with quality.

    Still, I’m as susceptible to this fallacy as anyone else. I’m suspicious of really low prices and will believe, at least in part, in the quality of a more expensive item.

    • Steve B says:

      How many times have we gone cheap and lost? Like get 5 people to bid on building you a house. The cheaper bid gets the job.

  5. Meagan says:

    Unless there is a really compelling reason to buy something mid range to expensive, I usually opt for the cheapest one. This has def burned me in the past though and there are certain things I buy the second cheapest or more expensive option. For me, organic fruits and veggies are worth the extra money because they taste sooooo much better. But I would have gone for the $7 earbuds :)

    • Steve B says:

      It’s according to how important. Food is important. organic is very high, but you have to go that route.

    • Steve B says:

      When you get a girl to come to your room you might go middle of the road and certainly not the cheapest.

  6. Steve B says:

    Cheap wine is better, because the more fruity wine has aged less. The fruity taste goes away the older the wine. Some things are higher, but make no sense. I saw an ink pen the other day for $800. How much better can it be than the $40 ink, but maybe gold. Look at Caviar. It is $200 an ounce and I’ve eaten them all, but I like the $5 a pound fish eggs better. I would rather drink a bottle of Riunite Lambrusco than expensive wine. I think higher rice matters on something say a Ford truck with better equipment is higher than a standard one. Then it makes more sense.

  7. Gwen H. says:

    nope I do my research and think of what I want to do with the product before I purchase.

  8. bloodbath says:

    I am frugal by nature so I will NEVER the high-price item. I would chose from among like-price low-price items after reading reviews from several websites. I read the negatives reviews from several sites first, I note the percentage of negative ratings, I read the positive and the mid-range ratings then I determine what potential problems there might be and if I don’t want to deal with them I don’t buy the product.

  9. No question I think that most people subconsciously interpret a higher price as implying better quality. That’s exactly why self-employed people shouldn’t aim to be the low-cost alternative!

  10. Bethany says:

    I generally stick to the middle of the price list, but I’ve found it’s a good rule of thumb for tools to buy the most expensive you can manage. I’ve got hammers, screwdrivers and the like that are well into their second decade without appreciable damage, while some of my neighbors are cheaping their way into annual restocking trips to Home Depot.

  11. adam carolla fan says:

    ive bought earbuds and headphones at the 99cent store and the dollar tree for years. some ended up being cheap trash or heaps uncomfortable to wear, but they worked, albeit not all that great. but lately ive had great success (borat style!) with the earbuds. I
    d recommend the99cent store’s earbuds to anyone.

  12. Michael says:

    I read the reviews critically. If a review sounds like a salesperson wrote it (i.e. “I like these so much I bought them for my entire family”) I don’t pay much attention to it. If there are a mixture of good and bad reviews, I look at the most recent reviews. It’s possible that more recent versions of the product have been manufactured with lower quality components of processes.


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