I heard about anchoring prices in a talk last month and it blew my mind a bit because I’ve definitely fallen for it a million times.
Ever plan on buying a bottle of wine at a restaurant, to then browse at a menu to see that you’re looking at £60 – £100? Now, good for you if you’re ok with that kind of price but for me, it makes my blood run cold.
You then see a bottle for £35. Phew! It’s about £15 more than you’d ever consider paying usually, but it’s so much cheaper than everything else (which you just wouldn’t pay for) – and it’s a nice place, so it’s bound to be nice, so you’ll get that.
Well, that’s what anchoring is. A restaurant, shop or whatever will ‘anchor’ a high price on something to make the ‘cheaper’ things seem less expensive than they already are.
My example is just that (before I get emails about never paying that much for wine), this counts for £6 ice-creams, bathroom units or watches.
The best way to sell a £2,000 necklace is to put it next to a £10,000 necklace.
The science behind price anchoring
*Picture this* Imagine me not hungover with a white coat on WITH ACTUAL SCIENCE FROM YALE. Here goes…
There’s this thing called ‘analysis paralysis’, where if you have too many choices, you can get demotivated. So research from Yale said that if you had two things that are similar prices, you’re less likely to buy one than if they were slightly different.
In one experiment, they give people a choice of buying a packet of chewing gum or keeping the money. When given a choice between two packs of gum, only 46% of people bought one when they were the same price, when 77% of people bought a pack when the prices were different.
There’s a huge amount of science backing it up and stores/restaurants etc implement this trick because it works.
What does this mean for me?
I suppose knowledge is power eh?
Now you know about price anchoring, odds are you’re going to see it all over the place. It’s important to remember to ignore the upper prices making you think you’re getting a bargain, and look at what you’re thinking of buying objectively.
- Is it a deal?
- If not, would you be happy to pay for it in isolation?
- BE PREPARED TO WALK AWAY
Life is long and there to be fun, so you don’t always have to get a bargain or a deal (I overpay for things all of the time – mostly if it’s for a nice occasion). But at least now you’ll know if you’re being tricked.
Have you noticed price anchoring before? Who are the worst culprits? Let me know in the comments.