In economics, engineering, business management and marketing the price–performance ratio is often written as cost–performance, cost–benefit or capability/price (C/P), refers to a product's ability to deliver performance, of any sort, for its price. Generally speaking, products with a lower price/performance ratio are more desirable on demand curve, excluding other factors.
Even though this term would seem to be a straightforward ratio, when price performance is improved, better, or increased, it actually refers to the performance divided by the price, in other words exactly the opposite ratio (i.e. an inverse ratio) to rank a product as having an increased price/performance.
Examples
Consumer and medical products
According to futurist Raymond Kurzweil, products start out as highly ineffective and highly expensive. However, products that rely primarily on paper (e.g., newspapers and toilet paper) and/or fossil fuels (e.g., electricity in most countries and petroleum gasoline for automobiles) have only increased in price.
This directly contradicts the trend of electronic gadgets like netbooks, desktop computers, and laptop computers that also have been decreasing in price. However, the prevailing inflation rate of a country or province/state may negate the plummeting costs of software, AIDS medications, and/or digital cameras in certain regions along with certain governmental policies. This has the effect of keeping costs high in certain areas while they are dramatically reduced in others.
In theory, this means that the rich people have earlier access to highly inefficient technologies, medical treatments, and therapies (that are prototypical in nature) while the poor get access to these same products when they become more efficient and easier to manufacture several years down the road. A negative value (i.e. less than 1) indicates that costs are running over budget.