How much should a diamond ring cost? How about a marketing course? The truth is, we often don't know the intrinsic value of things. We rely on comparison. The first piece of information (the "anchor") we receive becomes the standard against which everything else is judged.
The Classic Experiment
In a study, people were asked to write down the last two digits of their social security number. Then they were asked to bid on items like wine and chocolate. People with higher SSN digits bid 60-120% more than those with lower digits. The random number "anchored" their perception of value.
How to Use Anchoring in Marketing
1. Strike-Through Pricing
Ideally, show the "Original Price" crossed out next to the "Sale Price."
$199 $99
The $199 is the anchor. It makes $99 feel like a bargain. Without the anchor, $99 is just a cost.
2. Price Tiering (Decoy Pricing)
When selling SaaS or services, offer three tiers:
- Basic: $29
- Pro: $99 (The target)
- Enterprise: $499 (The anchor)
The $499 Enterprise plan exists primarily to make the $99 Pro plan look affordable and reasonable.
3. Monthly vs. Annual
Show the monthly cost of an annual plan next to the month-to-month cost.
"Pay $100/mo" vs "Pay $1200/yr (equivalent to $100/mo)".
Conclusion
You cannot avoid anchoring. If you don't set the anchor, the customer will set it themselves (often based on a cheaper competitor). Take control of the comparison context.
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