The impact of free and exaggerated prices on perceived quality of services

Abstract

Previous research in the price-quality area has largely limited its focus to the normal price range and has concentrated on physical goods almost entirely. This study examines the effect of offering a service for free and at an exaggerated price on the perception of its quality. Consistent with the theory developed in this paper, the experimental results suggest that when the tested services are offered for free and for exaggerated prices, they are perceived as lower in quality than when they are offered in a normal price range.

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Gorn, G.J., Tse, D.K. & Weinberg, C.B. The impact of free and exaggerated prices on perceived quality of services. Marketing Letters 2, 99–110 (1991). https://doi.org/10.1007/BF00436031

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Key words

  • Price
  • Quality
  • Service