Can your product's price change its quality?

I've been playing football with a bunch of my friends for over 3 years and we finally decided to get jerseys made for the crew.

The enthusiastic me, who came up with this idea as well, took the responsibility of getting this job done.

As I was doing this, I thought I'd run a small experiment to understand how the pricing of a product can impact the quality...better to say the perception of the quality of a product.

Sharing a few data points for you to get a better idea;

Cohort size: 20 kickass players

Target audience:

• Male
• Age: 22-50 years
• Earning >10LPA
• Mixed nationality

Product to be purchased: Jerseys

So, the idea was to purchase athletic wear - those "dry-fit" ones - and I went shopping.

The easiest place I could find to source was a store which is a multi-sports brand store - something like a Decathlon - which had its own products and other brands as well.

I finalised three products, that well, by "touching" felt had good/similar quality and looked pretty much the same.

This table should give you an idea about the three products and how they were priced;

Test 1: No price tag on the product

• 12 people preferred product A
• 8 people preferred product B

Learning: It seems evident that the products were similar to each other when it came to the touch and feel of the fabric. In the absence of pricing information, judgments were based on the physical attributes of the products.

Test 2: With the price tag on the product

• 5 people preferred product A
• 15 people preferred product B

Learning: Price tags alone altered perceptions, leading to the assumption that higher cost meant superior quality, even when the products were similar.

Test 3: Change the price tag of product B - i.e. 1400Rs to that of product C - i.e. 2000Rs

• 18 people preferred product A
• 2 people preferred product B

Learning: An almost 50% increase in the price of product B resulted in a majority of folks picking product A as the price of product B became really high and the group couldn't understand why they should pick B over A. Hence, it could be established that there's a threshold where price hikes can lead to scepticism and a preference for more affordable alternatives.

Test 4: Kept the original price of all products and introduced product C to the group

• 13 people preferred product C
• 5 people preferred product A
• 2 people preferred product B

Learning: Brand wins. If you have built a brand that customers trust, they are willing to pay a multiple over an un-branded product just because of that factor. Additionally, product B suffered because its price was slightly lower than that of product C but more than twice the price of product A - resulting in a lot of people gravitating towards either product C or product A

Disclaimer: This was a very limited data set and there are additional factors such as group influence, colour preference etc that would have impacted the results. Real-world consumer decisions are complex, and influenced by factors beyond price and quality. Additionally, the point of this exercise was not to tell how much you should price your product but just to showcase the impact of pricing and brand recognition.

Tbh, this was a pretty fun experiment to run and I'd love to have a chat with you about how you're thinking of pricing your product - feel free to reach out to me at maanav@bharatfoundersfund.com

Other BFF Banter;

1. Managing Round Construct and Cap Table
2. Building for developer-focused GTM

Hiring;

If you're looking out for a PM internship, we might have the next gig for you ;)

“The single most important decision in evaluating a business is pricing power.”

— Warren Buffett