perfect substitutes can replace each other, without trade-off in costs, or quality. for imperfect substitutes, the customer has to make a trade-off, either in price, or in quality. artificial leather is much cheaper than real leather, and can replace it in many situations - artificial and real leather are substitute goods. real leather is much more durable, and has a different look and feel. when these factors are important, the two are not interchangeable. for this reason artificial and real leather are imperfect substitutes.