You can get super-deep into the psychology behind price anchoring, which is simply offering your audience a focus price based on the fact that they tend to remember and rely on the first piece of information that they see. You often see this when a business offers a pricing table with three or four different choices.
That first piece of information that the audience sees is the anchor. Using price anchoring can help your audience feel like they’re getting a good deal and like they had a choice. It helps your customer feel like they are winners, and it’s a win-win for you too. To ensure that you practice effective price anchoring strategies, follow these tips.
Understand the Psychology
All you really need to know is that when a human sees a higher number at the start of any presentation (whether it’s in person, on the retail floor, on a website or something else), when the offer price is lower than that number they feel as if they’re getting a lot more value.
Start with a High Price
Always start with a high price in your sales copy to get your audience thinking about a higher price before you tell them about your actual price. Even if your item is still high priced, if it’s lower than the initial number you put in their head then they’re going to feel like they’re getting a bargain.
Drop the Price but Not Really
A great way to present your price is to use so-called manufacturer suggested retail price, or any number you want if your product is unique. If you can find a super-high priced item to compare it to, that will work too.
Add On Value
Always add on as much value as you can to anything you offer anyone. If you’re mowing grass, make sure you sweep up the mess. If you’re offering a service, do a little extra to wow your customer. If you’re offering a product, make sure the packaging is special. Whatever you can do to make it seem worth more can make a huge difference in perception.
Remember That Price Is Relative
As a business owner, if you price in the traditional way using costs and traditional markup as a factor, you could be leaving money on the table. Instead, use that as a starting point and then price according to value and based on who your audience is. You can often charge more with this in mind.
Show Other Prices on Similar Items
Even if you provide a service, you can put a price in your audience’s mind by stating that similar items / services usually cost xyz amount before telling them your amount. This puts a larger price in their head before they see the real price.
Use Package Comparisons
This works really well on memberships, monthly software fees, monthly memberships on products and even services. This is usually shown in a chart form where one of the choices is the package solution, which seems less expensive next to the anchor prices.
Don’t Discount the Value of Your Offering
One thing you want to be careful about doing is discounting your value so much that you set a new price anchor in the minds of your audience. You want them to be accustomed to well-priced, high value items from you.
Effective price anchoring works really well if you give it some thought and think outside of what you’ve learned about pricing. Lower is not always better, and do not start with low. Start with really, really high, and then display high to get the best from your products and services.