What is Price Anchoring?
Definition
A psychological pricing technique where an expensive option is displayed first to make other subscription tiers seem more affordable by comparison.
Understanding Price Anchoring
Price anchoring exploits the cognitive bias where people rely heavily on the first piece of information encountered. Subscription pricing pages often show the most expensive plan first (or highlight it as 'most popular') to make mid-tier plans seem like better value. For example, showing an Enterprise plan at $99/month makes the Pro plan at $29/month feel like a bargain.
Similarly, showing monthly pricing first makes annual plans (at a per-month discount) seem like great deals. Being aware of anchoring helps consumers evaluate subscription prices on their actual value rather than relative perception.
Related Terms
Pricing Model
The strategy a subscription service uses to structure its pricing, including flat-rate, tiered, usage-based, or hybrid approaches.
Tiered Pricing
A pricing strategy where a service offers multiple plan levels with different feature sets and price points to serve different customer segments.
Subscription
A recurring payment arrangement where a customer pays at regular intervals to access a product or service.