Few customers will pay for a perfectly engineered product.
Customers notice and are willing to pay for improvements to low-quality products more than high-quality products. A 10% improvement to a low-quality product will lend more than a 10% increase in the value of quality—the user’s perception of its quality. But as subsequent improvements are made, they add value at a decreasing rate. If a 10% quality improvement costs $10, a 20% improvement will cost more than $20. Eventually, the cost of improving quality increases at a faster rate than the improvement will be perceived.
The optimal quality-cost state theoretically occurs when the slopes of the value and cost curves are equal. At this point, the rate of improving a product equals the rate at which costs to the producer will increase. Beyond this point, the producer’s cost for providing one more unit of quality will exceed the value the customer will perceive.
