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Price Anchoring

What is it?

As the saying goes, the best way to sell a $2,000 watch is to put it right next to a $10,000 watch. But why? The culprit is a common cognitive bias called anchoring. Anchoring refers to the tendency to heavily rely on the first piece of information offered when making decisions.

In a study evaluating the effects of price anchors, researchers asked subjects to estimate the worth of a sample home. They provided pamphlets that included information about the surrounding houses; some had normal prices and others had artificially inflated prices. Both a group of undergraduate students and a selection of real-estate experts were swayed by the pamphlets with the higher prices. Anchoring even influenced the professionals!

Placing premium products and services near standard options may help create a clearer sense of value for potential customers, who will view the less expensive options as a bargain in comparison.



When Steve Jobs announced the first iPad, he told the crowd that analysts predicted he would sell it for $999. He put $999 on a big screen and let it sit there while he spoke.

When it came time to reveal the actual price, the $999 was flattened by a falling $499. With a simple animation, everyone in the room (who would undoubtedly buy an iPad) felt like they just saved $500.

What’s interesting is that no one in the room had any idea what an iPad was worth. How could they? It was a brand new product. Yet somehow they felt like they had the opportunity to buy it for less than its value.

Imagine if Steve Jobs presented the price the other way. Let’s say he put $199 on the screen and later increased it to $499. Everyone in the room would feel like they just got screwed, even though they were never going to get the iPad for $199.


Take action

  1. On your pricing pages list the prices from highest to lowest, not the reverse.
  2. Before the price is shown or announced, show or talk about a higher number. Ideally a number that is double or triple the value of the item or service that you want people to purchase.

Read more on this topic:

  1. https://wpsimplepay.com/price-anchoring-influencing-sales-with-different-price-tiers/
  2. https://mint.intuit.com/blog/how-to/price-anchoring/

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