Anchoring: How First Impressions Decide What Customers Will Pay
Why does a $90 bottle of wine suddenly feel like a bargain when it’s sitting next to a $300 bottle? That’s not luck, it’s Anchoring, one of the most powerful pricing strategies in psychology.
What is Anchoring?
Anchoring is the cognitive bias where people rely too heavily on the first piece of information they see (the “anchor”) when making decisions. In sales, the first number or price sets the frame for everything that follows.
The Psychology Behind It
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Reference Points: Customers compare new information to the first thing they saw.
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Perceived Value: A $50 item feels cheap if you first saw something priced at $200.
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Decision Shortcuts: Anchors reduce the mental load of deciding what’s “fair.”
Examples in Action
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Restaurant Menus: High-priced items are often included just to make mid-tier dishes look more affordable.
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Apple: The $1,099 iPhone makes the $799 model feel like a “deal.”
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Retail Sales: “Was £149, now £89” makes the discounted price more attractive, even if £89 was the real value all along.
How Businesses Can Use It (Ethically)
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Price Tiers: Offer a premium option, even if you expect most buyers to pick the mid-tier.
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Decoy Effect: Introduce a third option that makes the one you want people to choose look like the smartest choice.
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Discount Anchoring: Always show the original price next to the sale price.
The Warning
Anchoring works because it feels natural, but if customers suspect manipulation (fake discounts, false comparisons), trust is destroyed.
Takeaway:
Anchoring shows that the first number customers see shapes their entire buying decision. Get the anchor right, and you control the frame of value.