Price Anchoring: Psychology of Selling and Conversions

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nate-rio-price-anchoringPrice Anchoring – What is it?

Price anchoring, according to Wikipedia, is defined as:

a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the “anchor“) when making decisions. During decision making, anchoring occurs when individuals use an initial piece of information to make subsequent judgments.

This smart psychological tactic is used on you all the time, in order to get you to buy. And when used properly, you can use these same tactics in your marketing and sales strategy to convince your customers to buy.

One example of a major retail chain that uses price anchoring is Kohl’s. If you have ever shopped here, you’ll know what I mean. What they will do is, pretty much on the majority of their products, they will almost always be “on sale.”

Like a pair of jeans for example. You might go up to the rack and see that their normal price is $49, but then they have a 20% price tag off on the jeans, along with a pricing grid to show you that you can get them until the end of the week for only $29.

So your brain immediately tells you, “Hey, this is great deal.” And you feel justified for wanting to purchase them.

However, this same pair of jeans could be listed at a competitor store (let’s pick on Wal-Mart here for a minute) and there they are listed as just “$29.”

Since there is no “anchored” price that your brain is comparing the $29 to, you might just think you’re not getting as great of a deal. Despite the fact that the 2 pairs of jeans are identical in price.

You can use this method when promoting your front-end offer on your website. For instance, I’ll offer a FREE ebook (which you non-coincidentally get on the bottom of the page) and depending on the offer, I’ll put “normal price is $49” in the ad copy. So the visitor will feel like they are getting more of a bargain.

Watch the video above for further explanation!

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