A/B Test Ideas: Leverage the principle of anchoring prices to make the overall amount seem smaller
When we go shopping, we often think about the value of the things we’re buying. We’re looking for “a good deal” and we don’t want to spend more than we need to. We’re constantly comparing the price of what we’re buying with the amount we’ve got in our pocket. This is the anchoring effect in action.
What is anchoring?
We’re all familiar with the idea of anchoring. An anchor is something that keeps us in place. We use them when we go sailing, when we’re worried about drifting off-course. In the same way, the idea of anchoring in psychology is all about a point of reference.
It’s a starting point that influences our decision-making.
In psychology, anchoring is a cognitive bias. This means that it’s an inherent part of the way we think which we can’t avoid.
How does anchoring work?
We’re anchored by the first piece of information that we’re given.
It becomes the starting point against which we judge the rest of our decision-making.
For example, if we’re trying to decide if it’s worth paying $100 for a new bike, we’ll think about whether that’s a good deal or not. We’ll compare it to other bikes we’ve seen, to how much we’ve got in our pocket, and to how much we want a new bike. Once we’ve decided that it’s a good price, we’ll be anchored on this number.
If we’re then told that the price was discounted from $200, we’ll change our minds.
Even though the price is exactly the same and we’re still paying $100, we’ll think that we’re getting a better deal.
Anchoring and ecommerce
You see retailers use anchoring as a commonplace pricing strategy. They’ll display the price of a product with a strikethrough price to show how much it’s been discounted. Even if the original price is inflated and the product is only available at the discounted price, the anchor still works.
The customer will be thinking about how much they’re saving and they’ll be influenced by the savings that they’re making, rather than the price they’re paying. The same thing can be done with the price of a product per month or per day.
Even though the customer is paying the same amount in the end, they’ll think that they’re spending less money. It’s a much more effective way of increasing sales than just discounting the price.
Why we think this is a Good A/B Test:
This is easy to execute, and all it is, is just changing your copy and reframing the price in a way that’s more palatable to the consumer by breaking down the cost spread over time, versus a lump sum payment.