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Ever notice how a $100 pair of shoes on sale for $60 can feel like an amazing bargain?
We’ve all felt that little thrill when we see a high price slashed, as if we’re winning at shopping. This isn’t just luck or our inner shopaholic talking; it’s a pricing tactic at play. It’s called price anchoring, and savvy retailers from big-name brands to small DTC (Direct-to-consumer) shops use it every day to influence what we perceive as a good deal.
In the world of eCommerce, price anchoring is everywhere. That initial high price you see – whether it’s a strikethrough MSRP or a “compare at” price – sets a mental benchmark.
Everything after that suddenly looks cheaper or more expensive relative to the anchor. Done right, it can make shoppers feel they’ve hit the jackpot. In this post, we’re going to chat about what price anchoring really means, the psychology behind it, and different ways to use it.
Let’s get started.
Key Takeaways:
- Price anchoring uses an initial reference price, like a higher original price or a competitor’s price, to make the actual selling price appear more attractive and boost perceived value.
- This strategy works by tapping into consumer psychology through anchoring bias, loss aversion, and price framing, influencing shoppers’ decisions and creating a sense of reward or urgency.
- When applied transparently with clear, honest pricing and realistic comparisons, price anchoring can build trust and drive conversions.
Price anchoring is a strategy where you establish a reference price (the “anchor”) to frame the perceived value of another price. In simple terms, you show one price first, usually a higher one, to shape how shoppers perceive the value of another. That initial price sets a mental benchmark, so when the actual selling price appears, it feels like a bargain by comparison.
This works because our brains naturally compare rather than evaluate prices in isolation. If a jacket is listed as “Was $69, now $50”, the $69 acts as the anchor, making $50 seem like a steal—even if that was the intended price all along.
Anchors don’t need to be misleading. They can be a past price, a competitor’s price, or even a more premium version of the same product. In the crowded eCommerce space, anchoring gives your pricing a context that makes it more compelling.
Our brains aren’t great at knowing an item’s absolute value. Is a leather jacket worth $300 or $500? Without a frame of reference, it’s hard to judge, so we default to comparisons. The first number we see becomes our baseline, shaping how we view every price after that. This is called anchoring bias.
Two things happen when we see an anchor price. First, our brain uses price framing—it compares the new price to the original one. A $400 sneaker might seem expensive until it follows a $900 pair. Suddenly, it feels pretty reasonable. Second, there’s a reward trigger: a big discount makes us feel like we’re getting something extra. That thrill of “I saved $50!” often drives the decision more than the actual price itself.
Anchoring also ties into loss aversion. Say you offer a free trial—$0 becomes the anchor. When the trial ends, any price feels like a loss, but many people still convert to avoid giving it up.
Tiered pricing works the same way: when given high and low anchors, most shoppers settle on the middle, avoiding the extremes. All of this, framing, loss aversion, and comparison bias, explains why anchoring taps directly into how we’re wired to shop smart and avoid regret.
Price anchoring isn’t a one-size-fits-all tactic. There are several ways to use it, depending on your product, pricing strategy, and how you want customers to perceive value. Here are the most common approaches in eCommerce:
1. Strikethrough Pricing
This is the classic “Was $2,499, now $1,000” setup. The original price is displayed with a strikethrough next to the discounted price, visually framing the deal.
It’s simple and effective; the higher price creates a sense of savings and makes the lower price feel like a steal. This tactic taps directly into how we’ve been conditioned to recognize discounts.
2. High Price Anchor
By showing an expensive option first, say, an $800 luxury boot next to a $200 bestseller, you make the latter feel more affordable by comparison. Even if the $800 option doesn’t sell much, it sets a high benchmark that makes the $200 product seem like solid value.
Many luxury brands do this by including ultra-premium items in their catalog just to anchor perception.
3. Low Price Anchor
The reverse of high anchoring—this involves showing a very cheap option to make the next tier up feel more premium. A $5 basic tee next to a $30 designer version makes the latter seem higher quality.
Shoppers are nudged to avoid the too-cheap option and “upgrade” themselves to something better.
4. Tiered Pricing
This is the “basic, standard, premium” model. By offering three tiers, you create both high and low anchors that guide most shoppers to the middle option.
For example: $20/month for basic, $50/month for standard, and $150/month for premium. Most people skip the cheapest and the most expensive, settling on the middle, exactly where you want them.
5. Competitor Pricing
Here, the anchor comes from the outside. If your sneaker sells for $90, but you note that a similar one retails for $150 elsewhere, that $150 becomes the perceived value. Your $90 price feels like a win.
Many D2C brands use this to show customers they’re getting top-tier quality at a better rate. Just make sure the comparison is fair and believable.
Price anchoring is powerful, but it’s not a magic bullet. In some cases, it can fall flat or even hurt your brand. Here are situations where anchoring tends to miss the mark:
1. Tiny or Meaningless Discounts
If the difference between the anchor and actual price is too small, it won’t work. For example, slashing $100 to $98 doesn’t feel like a deal; it feels like a gimmick. A discount needs to be significant (generally 15% or more) to actually influence perception. Otherwise, you risk annoying customers rather than impressing them.
2. Savvy or Well-Informed Shoppers
Price anchoring loses power when your audience already knows the product’s real value. If a sneaker is clearly listed at $120 across multiple sites, showing a “was $200, now $120” price will feel deceptive. Modern shoppers use comparison tools, and if your anchor seems inflated, you may lose trust fast.
3. Products with Standard Pricing
When an item’s price is widely known—think iPhones, bestselling books, or popular gadgets—anchoring won’t change minds. You can’t convince someone that a $20 book is worth $40 just by saying so. In these cases, real value-adds or better customer experience carry more weight than psychological pricing.
4. Risk of Price Wars
Using competitor prices as anchors can backfire if you’re not prepared for a pricing battle. If you say, “Brand X sells for $100, ours is $70,” they might just lower their price to match or undercut you. This can trigger a race to the bottom, especially risky for smaller eCommerce brands without the margins to keep up.
5. Fake or Inflated Anchors
Nothing kills credibility faster than a dishonest anchor. If you claim an item was $100 and it clearly never sold at that price, shoppers will call your bluff. Transparent, honest anchoring builds trust. Stretching the truth might get short-term clicks but hurts long-term loyalty.
6. Going from Free to Paid
If you’ve always offered a product for free, like a newsletter, app, or trial, anchoring won’t help much when you introduce a price. People are anchored at $0, and any cost feels like a loss. You’ll need a thoughtful transition plan, not just a new price tag with a crossed-out “free.”
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Here are some practical, no-fluff tips to help you do it right, without coming off as sneaky or salesy.
1. Make the Anchor Clear and Visible
Don’t bury the anchor in fine print. Whether it’s a strikethrough original price or a “Compare at $120” label, it should be easy to spot.
The first number shoppers see becomes their mental reference point, so make sure it stands out. This is what sets the stage for that “wow, I’m getting a deal” feeling.
2. Use Honest, Believable Anchors
Anchors should reflect reality. That means showing a past price you genuinely charged or a verified competitor price, not some inflated number that makes the discount look huge.
If your dress usually sells for $80, don’t suddenly claim it was $180. Shoppers aren’t fooled, and your credibility takes a hit. A realistic MSRP or last season’s price works much better—and earns trust.
3. Explain the Value Difference
If you’re anchoring with competitor pricing or offering multiple tiers, add a little context. Why is your $100 pair of sneakers better than the competitor’s $150 version? Maybe yours skips retail markups or includes extra features.
If you’re showcasing a premium plan to make your mid-tier look better, clearly show what extras the higher-priced option includes. Anchoring works best when people understand the difference.
4. Use Bundles and Ranges to Anchor
Bundled pricing is a natural way to create anchors. Let’s say you sell “3 for $60” bundles, and buying those same items individually would cost $75. The individual prices serve as the anchor, and your bundle feels like a great value.
Similarly, service businesses can show a price range like “$200–$300,” anchoring expectations within that spread. It helps prevent sticker shock and subtly guides customers to the middle of the range.
5. A/B Test What Works Best
Not every audience reacts the same way to anchoring. Some respond better to high discounts, others to competitor comparisons. Try testing a 30% off anchor versus a 15% off, or a bold “Save $50” callout versus a percentage.
Also, experiment with where you place the anchor, what color you use for sale prices, and even the wording. Small changes can have a big impact.
6. Keep It Human and Relatable
Remember, you’re talking to real people, not just trying to push conversions. Use anchoring in a way that feels genuine. Something like: “This jacket used to be $200, but we dropped it to $140 because we think you’ll love it at this price.” That’s relatable.
Anchoring shouldn’t feel like a trick; it should help your customer feel smart about their purchase.
Yes—if it’s honest. It’s fine to show a real past price or competitor price as a reference. What’s not okay is faking an “original” price that never existed. To stay credible (and legal), make sure your anchor prices are based on reality, like MSRP, previous pricing, or a valid competitor comparison.
A sale is just a lower price. Anchoring gives that lower price context. For example, pricing a product at $30 is one thing, but saying “Was $50, now $30” makes that $30 feel like a deal. Anchoring is the presentation around the price that helps customers see the value.
Absolutely. Even new or small stores can use anchoring effectively. Mention what similar products sell for elsewhere, or create a premium version to make your main product feel more affordable. Anchoring isn’t just for big brands—it’s a flexible tool anyone can use.
Price anchoring isn’t just some clever pricing gimmick; it’s psychology in action. It helps shoppers make faster decisions, feel more confident about their purchase, and perceive real value. Whether you’re slashing prices during a seasonal sale, launching a new product, or structuring your pricing tiers, anchoring can be the subtle nudge that gets someone to hit “add to cart.”
The key is to keep it honest, make it obvious, and use it in ways that actually enhance your customer’s experience, not manipulate it. When done right, anchoring doesn’t just help you sell more, it builds trust.
We hope this article has helped you learn about price anchoring. If you have any doubts, drop them in the comments, and we’d be happy to help you.
