EDIT: Also, I have never and will never put any merit, or buy into the stigma that 'the more you pay the better the product.' I've worked retail for more than 10 years, and I've been in the technology field for almost 20; I know it's not true.
To an extent I agree. But there are cases where it I disagree.
You can imagine that a $10 dedicated server could not be afforded all the features you would expect in a world class data center. Once a product reaches a certain price point, there is no longer any significant added value in the service.
i.e. an entry level server for $20 may very well be twice as good as a $10 server given the reduced costs MUST mean some loss in service provision.
However a $100 server may be just as good as a $200 server as $100 is about the price point for a typical entry level.
Service providers with higher profit margin has more access to funding for further improvements through investment than other providers with lower profit margin. But there are reasons why some providers charge more than others and its not always to fatten up the wallets of the owners.
Lets say, me as a consumer were to give you a range between $500 and $1,000 USD budget per month. You'll go to your hardware database, and pull all results within that range (9 times out of 10) totally limiting my (the consumers) view of your products because you're only showing me a range of hardware that meets my specific numerical range. However, consumer ignorance isn't taken into account with this type of transaction, what if I really need something from you that would end up costing $2,000 per month instead of just $1,000 -- if that's the case, you could end up losing a $1,000 per month sale because you only showed me a range for a soft budget that I pulled out of my ass on a whim.
This works the other way around too. The consumer looses out on what they really want because they may have been concealing their true budget.
If you consider buying a home, you normally have a budget in mind. Budget is one of the first questions asked after "how many bedrooms?" and "where?". Would you LIE about your budget so you can save money? By hiding your true budget you are excluding options that may otherwise be available. If their budget is true than offering more expensive options would be a complete waist of time.
Here is how it normally goes and is generally accepted:
Client > I need a server!
Host > What are you looking for?
Client > Need a quad core CPU, 1TB HDD, 8GB RAM, and 5TB banwidth
Host > Oh certainly, we have plans A, B and C which cost $200, $250 and $300
Client > I cannot afford such a high price. Can you go any cheaper?
Host > I'm afraid we don't have any new quad cores available for less than $200. What is your budget?
Client > $150.
Host > Hmm. Well how about a Dual Core with HT technology?
Client > No I really need a quad core.
Host > How about an older model that we do not normally offer.
Client > Sure, as long as it is quad core!
This is generally how things go.
Come to think of it, there is no harm in a client stating their budget for anything. Want to buy a car? Give the salesman your budget. A house? give you budget! A server, no harm to give a budget either.
Most houses, cars and servers have a price tag. Offering a budget will not suddenly make those price tags go up.