Anchor Browsers onto Higher Prices

To decide if a price is high or low, shoppers set in their mind an anchor for what they consider to be a medium price. To have the customer purchase a higher-priced item, move the anchor point higher.

• Often, you’ll want to increase the shopper’s willingness to pay a higher price for a specific category of items, such as shoes, but not leave the shopper with the impression that your store policy is to charge high prices. Researchers at Hong Kong University of Science & Technology and Chinese University of Hong Kong suggest a tactic for this with both American and Hong Kong shoppers: Encourage the shopper to deliberate on high-priced items in that category and make their purchase decision before looking at other categories of items.
• Or you might want to position your store as offering superior quality across categories, charging premium prices for the assurance. Here, the researchers suggest that before you introduce the shopper to the category they’re looking for, you encourage the shopper to walk by high-priced items in a variety of categories as you talk about the price-quality link.
• With product categories like linens where there are many brands and many choices from each brand, group items with similar features together rather than grouping items from the same brand together. Stanford University researchers found that shoppers exposed to feature-based groupings were less likely to want to purchase lower-priced items.
• Introduce a higher-priced version of the product. Some of those same Stanford University researchers found that when a higher-priced alternative is added to the list of choices, the alternatives which cost less become more attractive to the shopper. Soon after retailer Williams-Sonoma added a $425 bread-making machine to their merchandise line, sales of the $275 unit doubled.
• When presenting prices to the customer, start with the highest and end with the lowest. Researchers at Hong Kong University of Science & Technology had participants rank prices of hotel rooms. Some were asked to rank from highest to lowest. Others were asked to rank the prices from lowest to highest. After completing the task, participants were asked to say how much they’d pay for a hotel room. Those who had ranked prices from highest to lowest were willing to pay an average of $19 more than were those in the lowest-to-highest group. The first group also estimated the average price of a hotel room to be higher.

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Move the Customer to Accept Higher Prices
Allow Modest Expectations of Discounted Products