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Price Anchoring, Or Why a $499 iPad Seems Inexpensive
11–20 of 82 posts
Re: Price Anchoring, Or Why a $499 iPad Seems Inexpensive
#12I am curious whether there are any examples of price anchoring for web apps. I know it is a very specific request, but if anyone knows such anchoring happening in web app space, please share the link.
Re: Price Anchoring, Or Why a $499 iPad Seems Inexpensive
#13If you’re selling something, ask for much more than you think you’re going to get.
Very often that can be simply offputting and can turn away would-be buyers. There's a difference between being susceptible to an effect and being completely controllable by it.
Re: Price Anchoring, Or Why a $499 iPad Seems Inexpensive
#14Dan Ariely gives a related TED talk: "Are we in control of our own decisions?" http://www.ted.com/talks/dan_ariely_asks_are_we_in_control_o... Look around 11:30 for a few examples of how comparing options affects us more than looking at each individually. On a side note, it also seems inexpensive because it's $499 and not $500! Psychological pricing is one of my larger pet peeves...
Dan Ariely's book Predictably Irrational is also highly recommended! It contains numerous such examples.
Re: Price Anchoring, Or Why a $499 iPad Seems Inexpensive
#15This works the other direction, too -- adding features without changing the initially-quoted price. That's often the tag on infomercials: after they set you up for the cheez-o-matic for such-and-such price, they "also throw in a free" mini-cheez-o-matic. Or you get a year of free support, or the 3 megabit connect for the 1.5 megabit price, or some other "added features" that make you feel like you're getting a deal e…
This is going to be a killer with the iPad.
I managed to avoid pre-ordering one, but as the app library grows and the iPad's potential use cases multiply, that $499 will start to look like an increasingly better deal.
Re: Price Anchoring, Or Why a $499 iPad Seems Inexpensive
#16If you’re selling something, ask for much more than you think you’re going to get. Very often that can be simply offputting and can turn away would-be buyers. There's a difference between being susceptible to an effect and being completely controllable by it.
According to the article, that's not what happens at all. In the case of personal injury lawsuits, there is no rebound, and people who ask for more simply get more.
It may be true that if you set a high price, and delay telling the customer about a deal, they will leave before you reveal the lower price. However, that's not what is typically done, and it seems like showing a deal is always more effective that just starting at a lower price.
Re: Price Anchoring, Or Why a $499 iPad Seems Inexpensive
#17I am curious whether there are any examples of price anchoring for web apps. I know it is a very specific request, but if anyone knows such anchoring happening in web app space, please share the link.
How about this: http://highrisehq.com/signup
If most of their customers fall into the $24/month "basic plan" category, then the highlighted plan of $49/month makes the $24/month plan look like a steal.
Re: Price Anchoring, Or Why a $499 iPad Seems Inexpensive
#18Agree with all the points on price anchoring... but $499 does not seem cheap to me at all for what you get with the entry level iPad. Maybe I need to watch Jobs presentation?
Re: Price Anchoring, Or Why a $499 iPad Seems Inexpensive
#19If you’re selling something, ask for much more than you think you’re going to get. Very often that can be simply offputting and can turn away would-be buyers. There's a difference between being susceptible to an effect and being completely controllable by it.
According to the article, that's not what happens at all. In the case of personal injury lawsuits, there is no rebound, and people who ask for more simply get more. It may be true that if you set a high price, and delay telling the customer about a deal, they will leave before you reveal the lower price. However, that's not what is typically done, and it seems like showing a deal is always more effective that just st…
it seems like showing a deal is always more effective that just starting at a lower price.
If you were to believe the article's unambiguous take on this, then your interpretation would be correct. However, I believe this is a naive view or one that is only true in limited situations and often not true in the reality of the marketplace where an unreasonably high price can simply turn someone away without leaving the possibility for any further negotiation.
Re: Price Anchoring, Or Why a $499 iPad Seems Inexpensive
#20There was an interesting article back in December in New York Mag about how restaurant menus are often designed with this intent (I believe it made it here but can't find link).
2.The Anchor: The main role of that $115 platter - the only three-digit thing on the menu - is to make everything else near it look like a relative bargain, Poundstone says.