One problem with this mentality is that customers need to search more and more to find blacksmiths that provide anything other than cheap swords. They may reasonably conclude that this is just the nature of swords, and that there’s no such thing as a sword that withstands more than one or two blows. Eventually, even people who want good swords accept that they won’t be able to find a blacksmith who makes them, and settle for cheap swords instead.
In effect, https://en.wikipedia.org/wiki/The_Market_for_Lemons