Price Anchoring

Anchoring is a cognitive bias in which the use of an arbitrary benchmark such as a purchase price or sticker price carries a disproportionately high weight in one's decision-making process. Price anchoring refers to the practice of establishing a price point which customers can refer to when making decisions.

In the context of a sale, the opening or initial offer is typically seen as an anchoring point. For example, if the customer first sees a men’s jacket that costs $2,200 – then see a second one that costs $1500 – he would prone to see the second shirt as cheap.

Price anchoring is a marketing technique that is used by many businesses to influence customer behavior and drive sales. While some people may consider price anchoring to be manipulative or unethical, it is not illegal, as long as businesses use it transparently and do not engage in deceptive practices.

People love to compare when valuing products and having an anchor price allows them to do that.

Anchoring, or rather the degree of anchoring, is going to be heavily determined by how salient the anchor is. The more relevant the anchor seems, the more people tend to cling to it. Also, the more difficult it is to value something, the more we tend to rely on anchors.
Price Anchoring