anchor pricing

Definition

A psychological pricing tactic where an initial high price makes subsequent prices seem more reasonable by comparison. It's why software shows you the $999/month enterprise plan first, making the $99/month option feel like a steal.

Example Usage

We added a $10,000 'platinum' package that nobody buys, but it makes our $2,000 package look reasonable—classic anchor pricing.

Origin

Behavioral economics research from the 1970s, particularly Kahneman and Tversky's work

Fun Fact

Restaurants deliberately place an absurdly expensive item on the menu (like a $200 steak) to make everything else seem affordable—and it works on almost everyone.

Source: Behavioral economics and pricing psychology

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