Psychology of price - Anchoring.

Have you ever looked at a top you liked and saw the price tag that said something like "Was 100, now 60", and thought to yourself, "wow that's a good price".

Did you stop to think whether 100 was a fair price to begin with?

Unfortunately for consumers this is a common trick used to get them to cough up their cash. 

It's called ANCHORING and it's as old as selling itself.

By creating a starting point, a point of reference, the consumer can be tricked into using a certain price as their anchor point. 

The same principle can be applied to a decision between multiple offers.

For example, when a man goes to buy an engagement ring, he (more often than not) will only look at a few stores. The first store visited will usually serve as the price anchor point on which the other stores will be judged.

So if the man sees a ring for 10,000 in the first shop, 12,000 in the second shop and 8,000 in the third shop, he will more than likely believe the first shop was average, the second shop expensive and the third shop cheap.

Whether or not all 3 were overpriced is not even considered.

Premium pricing can also come into play when the consumer goes for the higher priced product believing that price is an accurate measure of quality or class.

Be aware of this when buying. Use it to your advantage when selling.