Anchor pricing is commonly used to affect the way we view "real" prices. We fixate on the higher anchor price, which makes almost any lower price seem like a relatively good deal. Whenever good retailers have a sale they use anchoring very effectively, highlighting the higher "normal" price which makes the discounted sale price much more attractive.
Anchoring is also used by the organizers of events and conferences. Typically the higher "standard" registration fee acts as the anchor, and makes a discounted "early registration" fee seem much more attractive in comparison. Here is one example:
In this case the early registration price offers a significant discount: $500, or almost 25%. It seems like a great deal, but only because the higher anchor price of $2095 is there for comparison. That puts everything in a context we can understand.
Here is another example with an even bigger discount for early registration:
This time there is an early registration discount of $700, a little over 28%.
Anchor pricing is almost always powerful, but it is especially effective with events and conferences because it is so hard to assess value. In most other areas you can compare similar options (Ford vs Chevy, Honda vs Toyota, Miller Lite vs Bud Lite vs Coors Lite, etc.) and determine value, at least relative to close alternatives.
Events and conventions don't lend themselves to that. They're all very different. Even the same event can change dramatically from year to year.
But the anchor price shines. It establishes the value of the event, in the most authoritative and credible way possible, that the event is valuable.
Here is one more example:
This offers the biggest early registration discount of all at $700, or almost 50%. It seems like such an incredible savings it is difficult to pass up.
Early registration is also desirable for the organizers as it makes planning less stressful. It is relatively easy if more people register well in advance and must more difficult if people register at the last minute.
That means the early registration discount also drives the behavior that the organizer wants to see, so the anchor effect is really killing two birds with one stone.
Beyond Cost Plus is sponsored by FloristWare – the most popular independent POS software for flower shops.