Price-quality correlation in tenders

It is commonly assumed better quality comes at a cost, so higher quality products have a higher price. Here we investigate that assumption in the context of business to business public procurement. We use data from 400 real tenders. Results indicate there is a weak negative price-quality correlation, indicating higher quality is associated with lower prices. Data shows 30.6% of all winning tenders have the best score both on quality as well as the best score on price. These findings provide evidence to believe some companies have a good brand-image, or have structured its supply chain in such a way they can provide its customers high-quality products for a low price. Statistical tests performed on different subgroups pointed out the relation between price and quality does not vary across those groups: the difference between ‘product or service’ and ‘weight of price and quality’ most likely does not heavily influence the price-quality relation.