New research has exposed a myth: Price placebos aren't as effective as we thought. 

There is a longstanding belief that higher prices will lead to a higher perception of the quality of a product. This phenomenon is referred to as the marketing or pricing placebo effect.

Previous research indicated that higher prices improved product experience, including taste. 

Consumers judge products based on characteristics like:

• Price
• Packaging
• Country of origin, etc. 

If it’s more expensive, they typically assume it’s higher quality, to justify that price.

But new research suggests this is not the case. The study found that high prices can make your product more attractive by increasing consumer expectations, but only until it's experienced. 

Consequently, if your product does not meet the high expectations generated by its price, you risk disappointing customers.

As a result, the study's researchers advise caution when setting prices. As expectations go up, so should your quality.

The paper was recently published in Psychology & Marketing. It’s called “Pricey therefore good? Price affects expectations, but not quality perceptions and liking”.

Image: Ariyh