Together with a brilliant “Diamonds are forever” campaign, this anchor took hold, and decades of reinforcement by De Beers have brought us the diamond engagement ring sector as we know it today. They came up with this arbitrary figure just to prop up the price of diamonds. The idea of spending so much on an engagement ring was preposterous before De Beers started to anchor it as such in the 1930s. Example 4: The price of diamond engagement rings is the result of decades-long anchoringĬommon knowledge says it should be worth 1-3 months’ salary of the buyer. You can find 3 other important factors in our article The Psychology of Pricing: Hidden Factors Affecting Your Customers’ Buying Decisions. What are the factors influencing buyers’ decisions? Price is just one of them. The first digit was the same, so the difference seemed smaller … and led to a 51% increase in sales of the pricier option. With a $1 small cup and $1.25 for a large one, 56% of people decided to go for the larger option. In a study from 2021, a group of researchers from Ohio State University found out that when choosing between a small coffee for $0.95 and a large coffee priced at $1.20, only 29% of people chose to go with the larger option.īut everything changed when they increased the price of both options by 5 cents. That is why we are 50-100% more likely to buy a t-shirt costing €39.99 than one costing €40. Study after study finds that the first digit works as an anchor for price gauging. 99 price is the oldest trick in the book and does not work anymore … maybe you should think again. Suddenly 50 cents for a Nespresso pod looks like a bargain compared to €3,50 for an Americano at Starbucks.Įxample 3: The good ‘ol “.99” trick and the power of the first number anchor
When we think of a cup of coffee, we don’t compare it to a bag of coffee but to the cost of a cup at Starbucks. A pod equalled a cup of coffee, so it changed the anchor. Nespresso came up with the brilliant idea of selling their coffee in pods. Whenever we see a €45 bag of coffee, we compare it to the price we are used to, so it seems far too expensive. People are well aware of the prices per bag, as they buy coffee quite often. BUT, if you did the math, you would find that it is the same price per gram as 50 cents for a Nespresso pod Let’s be honest, €45 for a bag of coffee sounds ridiculous. What’s the highest price you would be willing to spend for a 474g (17oz) bag of coffee? €10? €20? €45? Nespresso went far beyond changing the price and changed the whole context.
Source: Money.inc Example 2: Changing the context to make the price seem lower Because of its ridiculous price, it makes the other items on the menu seem cheap in comparison. The Haute Dog of Serendipity 3, also known as “decoy”. After introducing the hot dog, the sales of their cheeseburgers skyrocketed. Just think about it – once you see that expensive hot dog on the menu, $17.95 for a cheeseburger suddenly seems like a much more reasonable price, doesn’t it? And that’s exactly how anchors work. A $ 69 hot dog.īut they didn’t make it to sell it, no. Literally – it made it to the Guinness Book of World Records. This restaurant in New York City created something no one had done before.
Example 1: Putting overpriced items on the menu first The anchor creates a reference point to which people compare other prices.īut is there a way to use this a bit more creatively? You bet. People’s tendency to rely and base their decisions on the first piece of information (often number) offered.
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