Price anchoring

Price anchoring is often a business strategy where a company sets a value of a certain package or tier to make other deals they provide seem more attractive.

How it works

Company A wants to improve their revenue of their streaming service. Looking at there metrics most are subscribed to the lowest tier which may indicate that the higher ones are either to pricey; or do not provide enough value to the user base currently using them. To fix this the company starts by downgrading the lowest tier things such as limiting the resolution or ad free viewing experience. And most times this kind of approach works as many consumers will likely spend more to get the value of the service that they had before the anchor got moved.

Why it is a problem

Like most practices, anchoring is psychologically manipulative to convince the customer that there is value in a specific product based on how much cheaper or more expensive other plans are.

Examples

Some examples of Price anchoring include:

*
*
*

---

Add your text below this box. Once this section is complete, delete this box by clicking on it and pressing backspace.