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.

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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 userbase 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.

How the practice works.

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Why it is a problem

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

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Examples

Some examples of Price Anchoring include:

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References