Price Anchoring

Price anchoring is a psychological strategy designed to reduce the perceived cost of your product by comparing it with something more expensive. The idea is that when the mind is exposed to a large number, other numbers seem small in comparison.

For example, if you have two pricing options for your product, one at $1500 and one at $500, the $500 option seems smaller than it would if the higher priced option wasn't presented alongside it.

This is why it's recommended to always have at least 2 pricing options for your product or service. Having a much higher option not only increases revenue (because a certain percentage of people will take the premium option) but also increases sales of your main offer because of the decrease in perceived cost.

This strategy can also be used by presenting a large number before the price is shown. In your sales copy you might talk about the "opportunity cost" of not taking action on something or solving a problem. You might tell a story of someone who spent enormous amounts of time and money to solve a problem that could have been solved with your product or service.

For example, if someone spent $50,000 in medical bills to solve a health problem that your product could have prevented, a $500 price tag might seem far less costly.

This is easy to use when there are monetary consequences involved, but if you're sharing something outside the topic of business or making money, find ways to quantify the value of your product. You can do this by talking about the opportunity cost of not solving the problem (see prompt) or by comparing your solution to more expensive or time-consuming options.