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*THREAD* Going to share a snippet from my upcoming e-mail course with @thedulab coming out later this week! This particular snippet is on price anchoring, what it is, and how to use it to help price your products in-store...
“Anchoring refers to the tendency to heavily rely on the first piece of information offered when making decisions.”
Anchoring is all around us. When you go to the grocery store, when you go to the mall, when you look at the price of gas, when retailers run a sale, the cost of living, when you go to costco, etc.
Your mind is naturally ALWAYS comparing things, our brains are wired to search for patterns and make sense of these patterns.
When you’re at the gas station and you’re used to paying $2/gallon, and all of a sudden you go to a new town and all the prices are minimum $3/gallon, you’re going to feel bad. The same item you’re used to paying $2 / gallon for is suddenly 50% higher.
Now what happens if you go to a different town and the price per gallon is suddenly $1? I can guarantee you that before you head home, even if your gas tank isn’t empty, you’ll probably be way more inclined to go to the gas station and “stock up” on gas before driving back.
The thing about prices in the world is… for the most part, prices are set by people. People take all the information available to them (variable costs, actual costs) and come up with a price for the said good/product.
Use this to your advantage and discount at opportune times. This will help increase your revenue gains. The key here is to find the right amount of time between discounting to maximize your revenue while not degrading your perceived value of your products.
Anchor your audience to your price, and then maximize your advantage against their price sensitivities by offering discounts at the correct intervals, and your revenue will increase while not diminishing your brand.
// Of course, this is all through practice and experimentation. I'm personally not a fan of running discounts all the time, I am using discounts as an example of how the anchoring effect works. BTW this is just 1/3 of the anchoring snippet from the upcoming course.
