Price anchoring is a psychological advertising strategy in which a more expensive product is juxtaposed with a less expensive one. The goal of this pricing presentation style is to increase the appeal of the less expensive good or service.The high-price option serves as an anchor in this strategy. Customers find the low-cost option more enticing and persuasive when weighed against the anchor option. The anchoring effect stems from the anchoring bias, which states that the lower price appears much more believable because of the product's initial benchmark price.How is price anchoring implemented?The way purchasing options are presented to clients in the price anchoring marketing approach aims to sway their decision-making. While two or more prices are placed against one another, a contrast is created that influences the customer's decision-making process while weighing their options. When compared to a more expensive alternative or options, the least expensive option even if it is truly pricey or moderately priced will appear more appealing.Price anchoring examplesPrice anchoring is a technique used by retailers and service providers of all stripes to convince consumers to make a purchase by laying them a range of options and emphasizing the price disparities. For instance, on a product page, Amazon lists more choices for a certain item. This is an example of price anchoring by Sephora based on the strikethrough pricing approach, with respect to the initial price. As a point of reference, there is the new discounted pricing. It is emphasized to make it look even cozier. On the other hand, the product's former strikethrough price has been crossed out. Compared to simply displaying the percentage amount, this method of communicating the discount has greater meaning for the customer.
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