Price anchoring is a psychological pricing technique that leverages the human tendency to rely heavily on the first piece of information encountered (the "anchor") when making decisions. In retail, showing a higher original price before revealing a lower sale price creates an anchor that makes the discount feel more substantial.
This technique manifests in multiple ways: crossed-out "was" prices, "compare at" values, percentage-off badges, and bundle pricing where individual item prices are shown before the discounted bundle total. Research consistently shows that anchoring significantly influences purchase decisions, even when consumers are aware of the technique.
Effective anchoring requires believable reference points. A product anchored at $200 and sold for $49 may trigger skepticism, while a $200 product at $149 feels like a genuine deal. For competitive analysis, examining how brands set their anchors—and how often products actually sell at anchor prices—reveals whether discounts are genuine promotions or permanent pricing strategies in disguise.