Price Vs Cost Vs Quality

Definitions

Price in economics and business is the result of an exchange and from that trade we assign a numerical monetary value to a good, service or asset.

In economics, business, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore.

Quality in business, engineering and manufacturing has a pragmatic interpretation as the non-inferiority or superiority of something. Quality is a perceptual, conditional and somewhat subjective attribute and may be understood differently by different people.
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Couple of days back I went to a restaurant where menu card had prices which were at least 10 times the price on other restaurants. At least thrice the cost of a good five star restaurant. And even then, this restaurant was packed with a huge queue. In this time of recession, there still people exist who are willing to pay such high prices for a commodity equivalent!!!

Even when you see the goods produced in China, the quality is not all that bad for the price those goods are offered. Then why does a human still goes for more expensive stuff?

If I produce something, all the expenses that I incur are added to get my cost of production. Price is the value at which I sell the produced good. In other words, for a buyer, price is the amount I am ready to pay for a particular good or service. This story is complete only when I bring quality in the loop.

When I buy a toilet cleaner, I pay for the perceived cleanliness that this cleaner will bring to my toilet. When I buy burger, I pay for fulfilling hunger that I may have. or just for the fact that I like the taste of a particular burger.

Lets take a little complicated item - car. The cost of manufacture of a typical car including cost of R&D etc. would be around USD 5,000. There are cars for sale right from this price of USD 5,000 to USD 100,000. Why would someone pay 20 times for a car when his/her basic need of travel is satisfied by paying so little. To make things complicated, these rich people would never drive their own car - so it may not be for driving fun. They would have a home-office which makes them travel very little and when travelling, most of their travel happens in the air!!! So is it only for the status that they get by buying such an expensive piece of machinery?

For the manufacturer,
profit = ( price - cost ) * number of goods sold

And to maximise my profits, I need to either increase price and to have customers buy at that price by improving perceived quality of my goods, or reduce my cost without reduction in perceived quality of my finished good. Or increase number of goods sold. Number of goods sold is directly proportional to the difference in the perceived quality by the customers and my list-price.

Now the only question is How to quantify quality? ... Such a simple question. but unanswered in most of the textbooks...