Anchors away: How Middle Price Options Help Customers Make Decisions (And Increase Your Sales)
By: Andy Shaw
Tags: Anchoring Effect, Marketing, Behavioral Economics, Sales, Pricing

Photo by Markus Winkler on Unsplash

Want your customer to make better choices for them and for your bottom line? Consider price anchoring.

What if there was a better way to make your customer to choose the more expensive option? And not because of money, but because it would truly benefit the customer — if only they could justify the cost.

Behavioral economics has an approach that I bet has already been working on you without you knowing it. It’s simple, it’s straightforward, and it’s a rare win-win.

We’ve all had a situation as customers where we are battling the dueling forces of budgets and desire. Sometimes, it’s a trivial matter like getting the nicer sweater. But there can be bigger things at stake, too.

I recently took my dog to the vet for dental surgery (and, as it turns out, almost much more.) My wife and I had to choose what services to pay for in advance. And that’s when we get that pitch that always seems like a guilt trip even though all the vet is really doing is giving you your options.

The vet would strongly like us to do a comprehensive exam before the surgery, especially with our older dog; we could also just do the basics. We don’t have to get the bloodwork and X-ray, and with the holidays, it sure would be nice to save some dough. She’s offering two legitimate options, but as consumers, sometimes we just want a nudge.

Thanks to behavioral economics — essentially, studying why people make illogical decisions and how to influence the right action — we can make those nudges happen.

Let’s say I was presented three hypothetical options like this:

$189.99: This offers the bare minimum to treat your pet. They’ll get the procedure and antibiotics, but you’ll be taking some risk without X-rays and bloodwork. $229.45: The most popular choice for our pet owners. Your pet gets recommended X-rays and bloodwork to make sure to minimize any unforeseen complications, as well as the procedure and antibiotics. $337.10: We’ll provide the most top-level care, with all of the above plus luxury bedding for them to recuperate and additional time offered for pickup.

We all want to be good pet owners! Just like the dentist or the mechanic, we all fudge a little bit about how good we are with recommended maintenance/routines, and humans also don’t want to appear uncaring. So we promise to floss more and get that transmission fluid changed, knowing we can always fudge it again the next time.

But with pets, you have a living, breathing example of what you’re doing. If you skip a recommended procedure, your dog could suffer; it’s one thing to get stranded and calling AAA, but it’s another to hear your dog needs major surgery because you kept putting off dental work.

So for veterinarians, I’d imagine they already have the guilt factor. They have the technical factor; we have to defer to them sometimes because we flat out don’t have the expertise to make a good call.

What we do face, though, is a budget. And as much as we want to take optimal care of Fido, we hope we can get by with the cheaper option anytime possible. Unless, of course, we can justify to ourselves that we did take the cheaper option.

That’s where anchoring and compromises come into play.