This study investigated perceptions useful for pricing decisions. Buyers observing premium prices may believe that “you get what you pay for,” but do buyers seeing low prices believe that “you do not get what you do not pay for”? This research tested the idea that these two statements often prompt different perceptions.
Data came from a questionnaire completed by 105 working professionals in an evening MBA program at a metropolitan university. A randomly selected half received one version, asking about the statement “you get what you pay for.” The other half received an otherwise identical version asking about “you do not get what you do not pay for.” All were asked whether they believed the statement, Yes or No, and then asked to offer an example from their own experience to support that answer.
As expected, different examples were offered, depending on the statement. Examples agreeing that “you get what you pay for” disproportionately involved quality. Examples of “you do not get what you do not pay for” disproportionately involved service or “extras” – whether they were examples in support of agreeing or disagreeing. Most respondents agreed with whichever statement they saw, but more agreed with “you get what you pay for.”
Managers fearful that lowering a price will signal a drop in quality – exemplifying “you do not get what you do not pay for” – may be misreading the way buyers think. Those considering setting a higher price than they otherwise might, to signal better quality, have evidence here to support that view. So do those who, regardless of price level, offer occasional unexpected “extras.”
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