Price Anchors

Definition

A price anchor sets a buyer's expectation at a certain price level. This is an often-used tactic to increase the perceived value of the good offered.

Explanation

Price anchors provide a reference which influences the perceived value of a product. They can also stimulate thoughts about the features of products that might be sold at these prices. Both factors can influence the buyer's willingness to pay for products.

What to watch out for

Do not overuse: Price anchors can be viewed as misleading, especially when all your products have them all the time.

Keep an eye on your whole portfolio: Price anchors can cannibalize the sales of your products that are not discounted as well as future sales for the same product.

Avoid conflict with other behavioral tactics: Price anchors can conflict with other behavioral tactics such as price thresholds.