This study proposes a nonlinear SERVQUAL model based on prospect theory. Although SERVQUAL has contributed to existing service quality-scales using performance-only measurement, there are still many complications in measuring perceived service quality. One important issue is the investigation of a nonlinear measurement model for observable perceived service quality considering that some researchers have addressed the essential nonlinear mental properties in service quality evaluation. To develop the nonlinear SERVQUAL model, this study focuses on the fundamental difference between difference-score and performance-only measurement, and it discusses the theoretical background of the SERVQUAL model with asymmetry and nonlinearity described by value function. The empirical analysis shows that the proposed nonlinear model provides a better understanding of the consumers' perceived service quality.