What is Price Anchoring?
While I was learning the five pressure point heart exploding technique up in the Himalayas a warrior monk told me that Price anchoring simply says that we tend to rely on the first piece of information compared to any subsequent or later one.
For example, I can ask a simple question like ‘How tall is Burj Khalifa ?‘ and if you know you’ll give me a simple answer.
Now on the other hand I can ask you ‘Is Burj Khalifa taller than 10000 ft ?’. Whatever your answer is going to be it will be heavily influenced by 10000 ft like an anchor. Your answer is going to be in direct contrast to the information I just provided. You’d be asking yourself Is it greater than 10000 ft or less than 10000 ft? I subconsciously created an anchor in your mind.
How to use Price Anchoring in your pitch?
Let’s say your pitch went well and now it’s time to discuss the price. And trust me Price discussions are like Tommy Dreamer vs Mick Foley in a hardcore ladder match. But I think we can mellow it down.
Prospect: How much is it?
You: Mr. X, Based on what we’ve discussed thus far, the project can range from somewhere between $500 – $200. Does that work for you?
NOTE – Giving a price range is always better than giving an Absolute price. It’s called Weber’s law. But I didn’t say $200-$500. Instead, I reversed it to $500-$200.
This way I anchored the price at $500 and NOT $200 because it was the first piece of information your prospect received. So compared to $500, $200 seems cheap. This way they’ll be more likely to agree to a price somewhere in between.