At the moment, a higher-skilled dwarf produces items of increasingly higher quality in increasingly shorter time.
As the result, legendary dwarves can produce a dozen exceptional and masterwork items in the time that a newbie dwarf will produce a single base quality one.
However in real life the situation is different. A highly skilled craftsman cannot produce masterwork items in hundreds - time required to produce a masterwork statue, or cabinet is much greater because of all the consideration and effort involved. At the same time, a highly skilled craftsman can produce items of regular quality at a much higher pace than a lower-skilled one.
So I'd like to suggest to reconsider the four factors: Skill, Quality, Time and Price in the following fashion:
1. Any craftsman, no matter how skilled, may produce either regular-quality or top-quality items.
2. Top quality means the dwarf will contribute his utmost effort into production of the highest-quality item available for his skill. This will take a considerable time and may result in complete (nothing produced, resources wasted) or partial (quality considerably lower than desired) failure. Time spent on production is either fixed or very weakly affected by skill. However higher skill means greatly reduced failure risks (slightly reduced chance of failure and noticeably reduced failure effects).
Skill 0: base quality, failure means nothing is produced.
Skill 1-2: well-crafted, failure results in no production or tattered/base quality item.
Skill 3-5: finely-crafted, failure results in tattered/base quality item.
Skill 6-8: superior quality, failure results in base quality item.
Skill 9-11: exceptional quality, failure results in base quality/well-crafted item.
Skill 12-15: masterwork, failure results in well-crafted item.
Skill 16-19: masterwork, failure results in well-crafted/finely-crafted item.
Skill 20: masterwork, failure results in finely-crafted item.
3. Regular quality means that the dwarf is doing his regular job, trying to mass-produce items but not trying to make each produced item into a work of art. Mass-production always yields results, so no resource is lost. Production quality slowly improved with skill, but main advantage of the skill is faster production. In other words, this production mode works similar to current system but quality grows much slower.
Skill 0: cannot mass-produce, for a dabbler every task is a daunting one requiring his utmost effort.
Skill 1: 100% base-quality items.
Skill 2-10: each skill level means +10% chance to produce a well-crafted item instead.
Skill 11: 100% well-crafted items.
Skill 12: 90% well-crafted items, 10% finely-crafted items.
Skill 13-17: each skill level means +15% chance to produce a finely-crafted item instead.
Skill 18: 100% finely-crafted items.
Skill 19: 90% finely-crafted items, 10% superior-quality items.
Skill 20: 75% finely-crafted items, 25% superior-quality items.
4. Dwarves with a high Excellence personality trait will sometimes (or often) work top-quality instead of mass-producing. Dwarves with a low Excellence personality trait may similarly ignore the top-quality orders and go for mass-production instead.
5. Quality price modifiers should be noticeably different using this system. Production of a masterwork item requires a dwarf with a Master skill or higher to spend a lot of his time, and even then the result is not guaranteed. Even finely-crafted items are difficult to produce in large quantities unless you have a legendary dwarf. So the price coefficient function becomes much more steep to compensate.
6. Benefits of high quality for weapons and armor should be buffed up as well.
7. Finally, production of top-quality items should result in much greater experience gain per unit of time than mass-production.
8. Interface-wise, there are many ways to skin a cat, but the simplest way would probably be to add another flag for a workshop order (Q for Quality, D for Dedicated or M for Mass-produce). Other options include a dwarf labour setting, or a workshop profile setting, or whatever else.
P. S.
Regarding (8), after some thinking I'm leaning towards making this a workshop profile setting for "Mass-Production" / "Quality Production" / "Worker Choice". Then the system could be reworked into a slightly more complicated system:
a. When there's no manager in the fort, all workshops are at "worker's choice" option.
b. When there's a manager, player can configure workshops in any way he sees fit.
c. Dwarves normally abide by workshop settings. However if their Excellence trait does not match workshop setting, they will sometimes choose to ignore the settings and start working according to their personal preferences.
d. After some time, manager will notice this. Higher managerial skill means that the manager will take notice much faster, maybe even immediately.
e. At that moment, manager will get a job to "Tell off" the insubordinate dwarf. Worker will get a negative thought from this, while manager may get either a positive thought, or a negative, or none at all, depending on his own personality.
f. Depending on manager's social skills, dwarf may switch back to prescribed working mode, or ignore the manager's telling-off and continue working as he likes. This may result in repeated telling-offs until the dwarf finally takes notice.