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Anchoring Effect? Why Products are Priced high Initially

by humbledmarket Banned
8 replies
Thought you all might be interested in this article:
Anchoring Effect You Are Not So Smart

We've all seen ebook or products price initially at say $XXX but there's a VERY LIMITED SALE it's only $XX at the moment.

Although sometimes it seems obvious that it's just a gimic don't you still feel like grabbing it?

he Misconception: You rationally analyze all factors before making a choice or determining value. The Truth: Your first perception lingers in your mind, affecting later perceptions and decisions.
A very interesting read but it's also very long lol.

I'm sure many have used it because others have it and it works but haven't really read the research and study behind it?
#anchoring #effect #high #initially #priced #products
  • Profile picture of the author Rob Howard
    Interesting.

    Its more difficult to do this online, unless you use an exit pop-up. Many people tend to find them annoying however.

    Also, there is the 'hand held value factor' - you see it, hold it, see the price, it becomes real. Selling digital products online makes that harder to convey value.

    However, with scarcity, it's a lot more of a punch. It's also easier to convey.

    I think this would make for a good split test. Start higher, go lower vs. Scarcity.

    Rob
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    • Profile picture of the author humbledmarket
      Banned
      Originally Posted by ccmusicman View Post

      Interesting.

      Its more difficult to do this online, unless you use an exit pop-up. Many people tend to find them annoying however.

      Also, there is the 'hand held value factor' - you see it, hold it, see the price, it becomes real. Selling digital products online makes that harder to convey value.

      However, with scarcity, it's a lot more of a punch. It's also easier to convey.

      I think this would make for a good split test. Start higher, go lower vs. Scarcity.

      Rob
      Yes, those exit pop up do tend to be annoying but I'd think that if your user read your sales page and really desired to purchase the product that pop up could be a benefit.

      But as you said on the other hand to those who weren't catch by your product those pop up would be a hindrance and a greater reason to leave.

      Great suggestion with the scarcity however I think many do not appreciate such as well. I was reading up one thread about some things not to do.

      One of it mentioned don't offer scarcity by amount but by time such as sales ends in 48 hours tend to convert better. I haven't personally tested it but it was somewhere here on the forum from a reputable member.
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  • Profile picture of the author Dave Owen
    We use Google Website optimizer to split test all of our digital product prices. We typically test 4 different price points for a month. We also have downsell exit scripts on each of these offers.

    This is the best approach, because at the end of the day the numbers in overall revenue do not lie. You can speculate on psychology all you want, but in the end testing is the only solution.

    So many factors vary from niche to niche that affect the perceived value of the product you are selling.

    Commit to learning how to test, rather than relying solely on "psychological" opinions for product pricing strategy.
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    • Profile picture of the author humbledmarket
      Banned
      Originally Posted by Dave Owen View Post

      We use Google Website optimizer to split test all of our digital product prices. We typically test 4 different price points for a month. We also have downsell exit scripts on each of these offers.

      This is the best approach, because at the end of the day the numbers in overall revenue do not lie. You can speculate on psychology all you want, but in the end testing is the only solution.

      So many factors vary from niche to niche that affect the perceived value of the product you are selling.

      Commit to learning how to test, rather than relying solely on "psychological" opinions for product pricing strategy.
      Thanks, Great to know the real facts instead of theories. I'll try to implement that on my sales page.

      Could you also kindly recommend some good exit scripts which I can implement on my sales page acceptable by clickbank?
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  • Profile picture of the author anthon
    Nice share.
    I enjoyed reading the article. although Little bit long

    And scarcity! the main formula for selling digital products.
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  • Profile picture of the author postsorcius
    Thanks for the research, it's quite interesting, and it's long, but great anyway!
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  • Profile picture of the author ShaneRQR
    Didn't read the article (too lazy right now), so I'm not sure if this was mentioned:

    Keep in mind that the anchoring effect happens, whether the numbers you use are related or not.

    In other words, you don't need to go "high price, now low price" to make use of the anchoring effect.

    If I talk about 20'000 monkeys and then ask you to guess the price of my product, your answer is going to be a higher number than if I didn't mention those 20'000 monkeys or talked about 3 monkeys instead.

    That's anchoring in action.

    It's quite rare to see this type of "cloaked" anchoring in sales-messages, but you can still spot it now and again.
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    • Profile picture of the author humbledmarket
      Banned
      Originally Posted by anthon View Post

      Nice share.
      I enjoyed reading the article. although Little bit long

      And scarcity! the main formula for selling digital products.
      Thanks, hope you enjoyed it. I actually only read half of it. The theory and couple examples gave up on all the other research.

      Originally Posted by postsorcius View Post

      Thanks for the research, it's quite interesting, and it's long, but great anyway!
      Yeh I know it was rather long I just read it to get the idea didn't read the additional facts and research.

      Originally Posted by ShaneRQR View Post

      Didn't read the article (too lazy right now), so I'm not sure if this was mentioned:

      Keep in mind that the anchoring effect happens, whether the numbers you use are related or not.

      In other words, you don't need to go "high price, now low price" to make use of the anchoring effect.

      If I talk about 20'000 monkeys and then ask you to guess the price of my product, your answer is going to be a higher number than if I didn't mention those 20'000 monkeys or talked about 3 monkeys instead.

      That's anchoring in action.

      It's quite rare to see this type of "cloaked" anchoring in sales-messages, but you can still spot it now and again.
      I guess there is two ways anchoring can be done with ecommerce such as having a listed original price followed by an actual price. Take a look if you were going to purchase some apparel and you saw the original price followed by a red tag discounted price that would be anchoring too.

      Although you may think there isn't much effect on a website with this similar method but yet many people do it. For example their WSO or their product you'd see something such as I would sell this for $XX but you get it for $X. In retail stores there isn't any such thing as exit scripts or special deals when visitors leave.

      I guess anchoring might be as much as listing the product value of the bonuses and then the final value price then later down cutting the price.

      So we actually have an advantage in e-commerce we can post the immediate discount and even an exit script with a downsell. Just giving them a value that they can consider.

      Additionally anchoring might be good for more than a sale in my opinion because humans tend to perceive price with quality. I guess that's inevitable. I sold my ebook for $4.99 and only got about 5 sales in a month. I rose it to $7.99 and more sales came in, then 17.99 and the sales boost and now $47 and people still purchase. Sure they ask more questions but it shows that quality is often associated with pricing although most of the time it isn't really true.
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