I have two words for you, "Packard Bell".
In the early 90s, Packard Bell was a major, well-respected, name-brand player in the PC market. Then they had a rough patch where they gained a reputation that their hardware was unreliable. After about a year ('94 or '95 IIRC), they got the situation under control. By '99, Packard Bell was essentially dead in the market because their reputation had never recovered.
Another word for you, "Dell".
Dell had a good reputation for their customer service, but they viewed it as a cost-center, so they decided to off-shore it to India. Their customer service reputation took a nose-dive, and still hasn't recovered, despite the fact that they've brought it back to the US. Virtually nobody buys a Dell because of the quality or expected service anymore. They buy almost solely on price.
Apple, on the other hand, has managed to cultivate a good reputation, and hasn't taken any of those 'cost saving measures' that so many other companies have. People buy Apple computers *specifically* because of the reputation for quality and service.
In short, a good reputation is worth more than making $100 more on every sale. A good reputation takes years to build, and moments to lose. A bad reputation takes years to get rid of, and moments to reinforce.