price anchoring
Also called: anchor price, pricing anchor
Presenting a reference number before or next to your price so customers judge the price against it: for example, what the problem costs them today, or the monthly price next to a cheaper yearly one.
Price anchoring uses the fact that people judge a price by comparing it with the first relevant number they see. Whatever that number is, the anchor, it shapes whether your price feels cheap or expensive. A 600 UAH subscription feels expensive next to a free app and cheap next to a 4,000 UAH monthly salary for doing the same job by hand.
For a business product the most honest and effective anchor is the cost of the problem today: the hours spent, the employee paid, the revenue lost. When you price from that cost and show it, the customer compares your price with their own losses rather than with the cheapest competitor. Anchoring on a rival's price usually drags you into a price war and leaves most of the value on the table.
Anchors also work inside a pricing page. The monthly price makes the yearly plan look like a saving; a higher plan makes the middle one look reasonable; a crossed-out regular price makes a launch offer feel real. Use anchors that are true: an invented "regular price" that nobody ever paid is a trick that customers eventually notice.
Example
Dennis, who owns a 4-bay shop, pays his niece 4,000 UAH a month to call regulars from a notebook. One returned oil-change visit leaves him about 700 UAH of margin, and he expects reminders to bring back at least 3 visits a month: 3 × 700 = 2,100 UAH.
Oscar opens with those two numbers, then names the price: 600 UAH a month, well below both the 4,000 UAH he pays now and the 2,100 UAH of extra margin (three and a half times the price). On the pricing page the monthly price then anchors the yearly plan: 6,000 UAH a year instead of 12 × 600 = 7,200 UAH.
Common mistakes
- Anchoring on the cheapest competitor. You'll end up arguing about a few hundred hryvnias instead of the value.
- Fake reference prices. A "regular price" nobody ever paid damages trust once noticed.
- Naming the price before the cost of the problem. Once the price is said first, it becomes the anchor.
- Anchoring on your own costs. Customers don't care what the product costs you; they care what it saves them.