Price Anchoring StrategyJul 18, 2022
Everyone is familiar with the story of Goldilocks and the Three Bears, at least I hope so or this newsletter is a flop after the first sentence.
Well, if you’re not, you definitely know the concept of: too hot, too cold, or just right. While this might be applicable to porridge temperatures as in the fairytale, it’s also applicable to pricing strategies for your business.
Buying and shopping is all psychological. People are always looking for deals that “make sense”. You always want to know that you’re getting a good deal to avoid any sort of buyer's remorse. So let’s think about “Price Anchoring” as “Decision Anchoring”.
Here’s a few examples of what I mean:
- Duration Anchoring - Do you sell months or blocks of programming? This is for you: So let’s say you know your process takes 3 months to complete or get the outcome you want. A pricing strategy to support this might look like this - $349/month or $897 for 3 months ($299/month) This strategy anchors the buyer into wanting the better deal of $299/month by purchasing 3 months at a time. Win for you, as you get the duration. Win for the client, as they get a more attractive price.
- Goldilocks Anchoring - Too much, not enough, just right. Ever see a pricing graphic that has 3 tiers of options: 1 - Basic / 2 - Premier “Most Popular” / 3 - Pro. Looking at just the words here, you’re being psychologically driven to choose the “Most Popular”. People want to be included, not excluded. This might also be accompanied by a checklist of everything included. The Basic - not enough, Pro - Too much, Premier - Just right.
- Volume Anchoring - Package selling people, where you at? Do you want 1 visit for $300? Or 20 visits for $200 each? Wow! What a massive deal. But, let’s combine this with the Goldilocks concept… What about 10 visits fo $220 each? “Just Right!”.
- Price range presented: $300 - $4,000
- Anchor point $2,200 (10 visit package)
- In this case you are putting a big enough spread between the 10 and 20 visit option, that it anchors the person to the middle options which is the goal!
One question I always ask my clients when discussing pricing options: “Which offer do you want them to buy?” - Then we build around that price point. Remember, pricing needs to make sense!
If you’d like to work on your offers 1:1 with me, just send me an email!
Interested in learning how to apply this to your clients?