Anchor Pricing Strategy: How to Make Your Product Look Cheaper by Comparison

How do you sell a $2,000 watch? You don't try to explain the gears or the leather quality immediately. You simply put it in a display case next to a $10,000 watch.

Suddenly, the $2,000 watch doesn't look expensive. It looks like a "smart choice."

This is Anchor Pricing. It is one of the most powerful psychological triggers in retail history. Humans are terrible at judging the absolute value of things (i.e., "Is this car worth $20k?"). We are excellent, however, at judging relative value (i.e., "Is this car cheaper than that other car?").

In this guide, we will break down the science of anchoring and give you 5 actionable strategies to increase your conversion rate on Amazon, Shopify, and TikTok Shop.

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The Science: Why Our Brains Need Anchors

The concept comes from cognitive psychology. The "Anchoring Effect" states that humans rely too heavily on the first piece of information offered (the "anchor") when making decisions.

Once an anchor is set, other judgments are made by adjusting away from that anchor.

• Scenario A: You see a leather bag for $100. It feels expensive.
• Scenario B: You see a leather bag marked "$300", but it is crossed out and priced at $100. It feels like a steal.

The price is identical ($100). The value proposition is completely different. In Scenario B, the $300 anchor framed the purchase as a "gain" of $200, rather than a "cost" of $100.

Strategy 1: Strike-Through Pricing (The Classic)

This is the most common form of anchoring in e-commerce. You display a "List Price" or "MSRP" (Manufacturer's Suggested Retail Price) that is higher than your selling price.

How to do it correctly:

• The Visuals: The anchor price ($50) should be smaller and grey. The selling price ($29) should be larger, bold, and often red or black.
• The Math: The discount needs to be significant enough to matter, but believable. A 20% to 50% discount is the sweet spot. A 90% discount looks like a scam.
• The Label: Use words like "Save $20" or "40% Off." Explicitly state the gain.

Strategy 2: Tiered Pricing (Goldilocks Effect)

This is critical for SaaS, bundles, or subscription boxes. You offer three options:

1. The Cheap Option ($10): Lacks features.
2. The Expensive Anchor ($100): Has features nobody needs.
3. The Target Option ($40): The one you actually want to sell.

The $100 option exists purely to make the $40 option look affordable. Without the $100 anchor, the $40 option looks expensive compared to the $10 one.

(Read more about this in our Decoy Effect Guide).

Strategy 3: The "Expensive First" Sort

If you run a Shopify store or a brand site, check your "Default Sort" order on collection pages.

Most stores sort by "Newest" or "Best Selling." However, luxury brands often sort by Price: High to Low (or they manually feature an expensive "Hero Product" at the top).

Why? If the first item a customer sees is a $500 jacket, their internal anchor is set to "$500." When they scroll down and see a $150 shirt, it feels cheap.

If the first item they see is a $20 pair of socks, the $150 shirt feels incredibly expensive.

Strategy 4: Competitive Anchoring

You don't always have to anchor against your own prices. You can anchor against the "Industry Standard."

This is common on landing pages. You might see a chart comparing your product to a "Leading Competitor."

• Competitor: $200 (No Warranty, Slow Shipping)
• Us: $140 (Lifetime Warranty, Fast Shipping)

You have anchored the customer's expectation of value at $200. Your $140 price tag now looks like an underpayment for a superior product.

Strategy 5: Verbal Anchoring (For TikTok/Reels)

If you are creating content for TikTok Shop, you have seconds to set the value. Use "Verbal Anchoring" in your script.

Bad Script: "Buy this cleaning tool for $20."

Anchored Script: "I used to spend $150 hiring a professional cleaner every week [Anchor Established]. Then I found this tool. It does the same job, but it only costs $20 once."

The customer isn't comparing $20 to $0. They are comparing $20 to $150.

How to Implement Anchors by Platform

FAQ

Can an anchor be too high?

Yes. If you try to sell a generic T-shirt for $20, but anchor it against a $500 Gucci shirt, the anchor fails because the products aren't comparable. The anchor must be relevant.

Does this work for dropshipping?

Absolutely. Dropshippers often have high margins because they source cheaply. However, dropshippers are notorious for fake discounts (e.g., "Was $100, Now $10"). This erodes trust. A "Was $30, Now $19" is much more believable and converts better long-term.

Is "Bundle Pricing" a form of anchoring?

Yes. When you sell a bundle, the anchor is the "Sum of the parts." (e.g., "Buying these 3 items individually costs $90. The bundle is $70.") The $90 anchor drives the sale. (See our Bundle Pricing Guide).

Conclusion

Anchor pricing isn't about tricking people. It's about context.

Price is a hallucination. It only exists in comparison to something else. If you don't provide the comparison (the anchor), your customer will compare your price to $0, and you will always lose.

Your Action Step: Go to your product page right now. Is there a reference price? Is there a competitor comparison? If your price stands alone, you are leaving money on the table.