How to use psychological anchoring in your pricing strategy

It sounds counter-intuitive but pricing isn’t just about the numbers. It’s about perception, positioning, and psychology.

Get it right, and your customers will see the value of your offer before they even see your brand or read the fine print. Get it wrong, and they’ll hesitate, compare, (and, worst of all leave). You need to make your offer so unique, it’s impossible to compare to competitors.

One of the most powerful pricing tactics we recommend is psychological anchoring. It’s a strategy that leverages the human brain’s tendency to rely on the first piece of information (the “anchor”) when making decisions.

Let’s break it down—step by step—so you can start using it today.

What is psychological pricing anchoring?

Psychological anchoring is when the first number a customer sees influences their perception of value. If you see a product priced at £2,500 before being offered a £1,200 option, the second price feels like a bargain—even if £1,200 is still a lot.

Weird, why does psychological anchoring work?

Our brains love shortcuts. We’re made to find the path of least resistance!

Instead of analysing every option rationally, we latch onto the first number we see. That number becomes our reference point, shaping how we evaluate everything that follows.

The role of high anchor pricing

Introducing a premium-priced product first makes lower-tier options seem more attractive. It shifts the frame of reference, making customers feel like they’re getting a better deal.

So when should you use high anchors?

• If you’re selling tiered services
• If you’re offering premium and standard product versions
• If you’re introducing a new pricing structure
• If you’re bundling products together

Brilliant, so how do I set an effective pricing anchor?

1. Start high – Always introduce your most expensive option first.
2. Ensure value justification – The high-price option must offer real value to be credible. Your clients should see why this is the most expensive option.
3. Contrast clearly – Make the next option feel like a significant step down in price.
4. Limit choices – Too many options create decision paralysis. Keep it simple.
5. Use strategic design – Present the premium option prominently to draw attention.

The power of premium decoy pricing

A premium option nobody buys can still drive sales. Remember that, you almost want a tier that most of your clients will say ‘no way’ to.

If you sell a £2,000 and £1,000 option, adding a £3,500 “Luxury” tier makes £2,000 feel mid-range. This psychological shift changes customer perception of your mid tier offer.

Anchoring in subscription pricing

Ever wondered why software companies list their enterprise plan first? That’s anchoring.

The higher price makes mid-tier plans feel like a steal, increasing conversions.

The decoy effect in anchoring

A £99 basic plan.

A £149 standard plan.

A £155 premium plan with extra features.

Most people choose £149—it looks like better value because £155 isn’t much more. That’s the decoy effect in action.

Using price anchors in e-commerce

Anchor pricing isn’t just for services. Retailers use it daily, once you know the tricks, you’ll spot this kind of thing everywhere;

1. Showing an “original” price before a discount
2. Offering premium bundles alongside basic products
3. Listing high-end models before standard versions

Real-world examples of pricing anchors

Apple: Launches high-priced models first, making lower-end versions seem affordable.

Starbucks: The largest coffee size makes medium feel reasonably priced.

SaaS: Enterprise plans make business-tier subscriptions look cost-effective.

The psychology behind perceived value

People associate higher prices with better quality. Even when that’s not necessarily true, the perception remains. Use this to your advantage.

Here’s how to create a compelling pricing page

Your pricing page should:

• Start with the highest-priced tier
• Highlight the most popular option
• Use design to make mid-tier pricing stand out

A warning, when anchoring fails, it causes damage

Anchoring backfires when:

• The premium option isn’t credible
• Prices feel arbitrary or misleading
• Too many options overwhelm customers

Remember, anchoring isn’t about manipulation. It’s about effectively presenting value. Always ensure your pricing is fair, transparent, and aligned with your offer.

Don’t be afraid to mention scarcity and urgency

Limited-time discounts with high original prices reinforce anchoring.

A product that was “£500, now £299” feels like a deal—even if £299 was the target price all along.

Luxury brands set high prices to maintain exclusivity. A £10,000 watch makes a £5,000 one seem reasonable, even if both are premium products.

Want to increase your average order value?

We recommend positioning premium add-ons as small incremental costs compared to the main purchase. You’re essentially getting interested buyers to climb up your pricing ladder.

Using testimonials is the best thing you can do

Customers trust social proof. Highlighting testimonials from premium buyers makes mid-tier options look like a smart compromise.

So why does this work?

People love feeling like they’ve made a smart decision. Anchoring guides them toward a choice that feels like a win.

Keep testing and refining!

Every audience reacts differently. A/B test different anchor prices, measure conversions, and refine your approach over time. See what works for your business and see how buyers react.

Remember, pricing isn’t just a numbers game, it’s a strategic one. Using psychological anchoring effectively can shape how customers perceive value, influence their decisions, and ultimately increase how much money your business can make. It’s something you should constantly be refining and tweaking.

Put this into practice. Experiment, test, and refine. The results might surprise you!