PAF evaluated the Rafale, the decision was to go for an upgraded FC20. According to PAF pilots the FC20 had more potential, was much more cheaper and could be designed according to PAF's requirements.
First of all the plane is too expensive, second its here a little bit too late like the Eurofighter. But i think the most important factor that has led to Rafale's failure has been French arrogance in marketing, they need to learn the ABC's of marketing.
The French were never interested in their customers and now they are going to pay a price for their arrogance. Dassault's marketing teams should have been in Pakistan, Australia, Switzerland or any other countries that were were operating the Mirages. But the French due to their arrogance didn't bother doing any of that, this is why they are yet to sell a plane abroad.
Gone are the days when the French or other European nations could design their own planes and build all of its sub systems. In the future i see China, Russia and the US being able to manufacture their own planes and their subsystems. The Europeans made a huge mistake of putting a military embargo on the Chinese, while the Americans sold arms to other countries for billions of dollars, all the Europeans could do was watch
. This embargo pissed off the Chinese whom doubled the effort of improving their indigenous military industry, the results of that are in front of us today.