After counseling students for more than 3 years now, I believe that it is always profitable to be honest for maintaining a long term growth in the business.
One may get a very good business by not being transparent about a product/service for a short period, but it hits the business if one aims at a long term and continuous growth in business.
It is extremely important to sell your product in the best possible manner so that more and more people buy it, but at the same time it is extremely important that you do not over estimate your product because this will bring disappointment to the customer which will do a negative marketing of the product/service automatically.
One should try and come up with the best product with best qualities and then sell it honestly without making any false promises which can never be fulfilled.
Honesty = Long Term Growth in Business