Tuesday, November 6, 2012

Price anchoring with comparisons

Price anchoring is a very effective technique in which you ask your visitors to consider 2 or more price points for the same or similar product.  The decoy price affects your visitor's opinion of the real price.  One of the most common ways of price anchoring is when you show two very similar products that have very different prices.  

This comparative technique can be used in two different ways; to increase the perception of quality in the higher priced item, or to increase the economy of the lower priced item.  It is important to be conscious of who your visitors are and what their goals are.

High end designers, like Coach, often have a couple of really expensive handbags ($1,000 and up) to make the $300 and $400 handbags look affordable.  Coach even uses this same technique on their website where I counted 27 handbags over $1,000 sprinkled in a sea of almost 700 items.  Designers succeed at this because their customers want to be associated with the brand but can't always afford the most expensive items.  These expensive items also serve to elevate the value of the brand.

High end car companies, like BMW, love comparing themselves to their, often lower priced, competitors because it elevates their perceived quality.  Their ads encourage the thought that for just a little more money, you can get a better, faster, stronger product.  Car companies succeed at this because their customers want the best their money can buy.

Many companies actually do both.  They lure you in, telling you their product is the best money can buy and then get you to look at an extremely high priced version of their product so that your decision seems much more practical.

It's important not to confuse these two price comparisons.   You want to be the quality choice when compared to your competitors, but once they have chosen you, you want to help your visitors make the practical choice for your product offerings.