How Better Quality Affects Pricing

摘要

Improving production quality to levels that guarantee high production efficiency and prevent the waste of resources is a prime goal of financially successful companies. Achieving highest possible quality minimizes the costs of poor quality and thereby the overall production costs. But in addition to this internal effect of better quality, customer satisfaction increases when a lower percentage of faulty product reaches the marketplace. Companies with high internal quality can also achieve very low levels of externally discovered defects. Conversely, poor quality producers have to struggle to keep their external quality at reasonable levels, even if they conduct extensive inspection, because inspection can never completely inspect out all faulty products. Given this relationship between internal and external quality, an interesting question is whether better quality can have a positive effect on a company's pricing options.