Apple's Price Anchoring Tactics

The best way to sell a $10,000 car is to put it next to the $20,000 car in your yard.

Why? There’s this?cognitive bias our minds have called anchoring. We use the first piece of information ($20,000 price) to decide about the second piece ($10,000 price).

This image from Base Camp and Marketing Examples sums it up nicely.

It’s a well-known trick backed by a surprising?amount of research?that can help you sell more by making your goods and services appear cheaper than they are.

Steve Jobs was a big fan of price anchoring. In 2010, when he unveiled the iPad at one of his masterful product launches, he told the audience that analysts expected the price to be $999. He left that number on the big screen behind him as he continued his presentation.

When he revealed that the actual price was $499, he received a standing ovation. Anchored to $999 – $499 was a steal.

Real estate agents often employ this trick at open homes. In those little brochures, they hand you as you walk in, they include information about recent sales of surrounding homes. And, of course, they only show you info about houses that have sold for a price way above the one you’re viewing.

You can apply this technique to anything you’re trying to sell. Just make sure your anchor price is believable and not bullsh*t.

The real estate agent is using real data – just carefully selected. Steve Jobs was using real analyst expectations – again, carefully selected.