fbpx

Price Anchoring

If ever you go to a wine bar, the first wine on the menu will often be one of the most expensive (but certainly not THE most expensive). Why? 

Because the first price a buyer sees will become the anchor by which they compare prices for the rest of the buying journey. 

But restaurants are the only ones to make use of this cognitive bias. Amazon uses it on nearly every single page of their site.

In today’s edition of Why We Buy, we’re taking a look at Price Anchoring – how to make your product appear to be a great deal.

Let’s get into it.

“Top Marketing Newsletters You Need to Subscribe To”

Inside Your Buyer’s Mind 🧐

Your buyer is constantly absorbing new information as they move through the buying journey. To help make sense of it all, they need to compare new information with data they already have a strong grasp on. 

 When it comes to price, your buyer will be actively comparing your price to the prices of equivalent products.

 So if you’re trying to sell a hamburger, your buyer will assess your offer based on what they’ve paid previously for a hamburger or understand a hamburger to be worth.

The Psychology of Price Anchoring🧠

Typically, the first price a buyer hears has the most significant impact on their buying decision. That first price becomes an anchor in their mind – an unmoving point of reference to compare everything else. 

So if you’re trying to sell a $100/month/person piece of remote collaboration software, you’re going to want to first mention the cost of a more expensive alternative. In this case, renting an office can cost over $400/month/person. 

Now that $400/month/person is a price anchor, when you reveal that yours costs $100/month/person, it seems like a deal. 

Conversely, if you first mention a lower anchor price, any offer you make will seem expensive in contrast.

How To Apply This 🤑

Alright, so how can we apply this right now to sell more.

Provide price comparisons for your buyer

Amazon is a master at price anchoring. On every single item they show the retail price crossed out and the Amazon price below it (always less, always in bold). Pro Move: include the percentage difference to save them the mental strain.

Ask your buyer for their budget before revealing your price

If you can learn what your buyer’s budget is, you can offer your product for a smidge under so they feel like they’re getting a terrific deal.

Get creative to what alternative you’re comparing yourself to

A $2,000 Peloton spin bike seems cheap in comparison to a personal trainer ($100/class) or a home gym ($5,000+). Get creative about how you position yourself and who your competitors are.

The Short of It 💥

The first price a buyer hears is going to be anchored in their mind for the rest of the buying journey. Be proactive about choosing what alternatives your buyer is comparing you with. Frame your offer with expensive alternatives to make your price seem like a great deal.

Until next time, happy selling!

Pssssttt…

 

Wanna really get inside your buyer’s head?

There are a few ways I can help:

  1. Get explosive clarity about what works with buyers by learning how to conduct 1:1 Clarity Calls (2000+ happy students)
  2. *NEW* Learn how to mine online reviews from real buyers to generate ideas and copy that converts (250+ happy students)
  3. Book a 1:1 strategy call with Katelyn and get the answers you need to get unstuck and move forward with confidence

Written By Katelyn

Katelyn Bourgoin is the CEO of Customer Camp, a 4X founder, and a cheese lover. She lives by a simple mantra: whoever gets closer to the customer wins.

Related Posts

Oatly

Oatly

Let’s explore how Oatly can make people excited about drinking milk made from oats and how you can use the same strategies for your business.

Dunning-Kruger Effect

Dunning-Kruger Effect

Let’s explore the Dunning-Kruger Effect – why we overestimate our competence regardless of our lack of knowledge or skill set.

Pain of Paying

Pain of Paying

Let’s explore the Pain of Paying – why paying upfront removes the pain of playing down the line.

Moment of Wow

Moment of Wow

Let’s explore The Moment of Wow – the critical moment when your user thinks to themselves “Wow, how did I ever live without this?”

Mimicry

Mimicry

Let’s explore Mimicry – why we unconsciously imitate behaviours, speech, & movements of others (and how being a copycat can drive conversions).

Reciprocity

Reciprocity

Let’s explore Reciprocity – why we feel compelled to “return the favour” after we’re given something.

Bikeshedding

Bikeshedding

Let’s explore Bikeshedding – why we spend too much time on things that don’t matter.

Priming

Priming

Let’s explore Priming — why exposure to images and ideas can get you to make decisions faster.

Hindsight Bias

Hindsight Bias

Let’s explore Hindsight Bias – why we always end up saying: “I knew that was going to happen.”

Comments

0 Comments

0 Comments

BECOME A MINDREADER

Wanna get inside your buyer’s head? Join our newsletter and get one customer psychology tip delivered straight to your inbox each week. It’s like a 2-min workout for your brain.

You're in. Giddy up! 🤠

Become the go-to customer EXPERT

If you can figure out what makes people tick, click and buy, you can make bank

We’re often asked if we offer a certification program teaching our in-depth research methods. The answer is… not yet. But we’re working on it.

Want first dibs when we launch our new certification program? Jump on the waitlist.

You're in. Giddy up 🤠

BECOME A MINDREADER

Wanna get inside your buyer’s head? Join our newsletter and get one buyer psychology tip delivered to your inbox each week. It’s like a 2-min workout for your brain.

You're in!

BECOME THE GO-TO CUSTOMER EXPERT

If you can figure out what makes people tick, click and buy, you can make big $$$. We're working on a new research certification program. Want first dibs when we launch it? Hop on the waitlist.

You're in!

JOIN WAITLIST

Wanna get the buyer insights you need from key stakeholders (and look like a boss)? Our new Stakeholder Mining Kick-off Session training is coming soon. Join the waitlist to get first dibs.

You're on the waitlist! We'll reach out soon!

JOIN WAITLIST

Wanna get the buyer insights you need from key stakeholders (and look like a boss)? Our new Stakeholder Mining Kick-off Session training is coming soon. Join the waitlist to get first dibs.

You're in!