Anchoring is among the most replicated findings in behavioural economics and among the most systematically underutilised in commercial pricing design. The mechanism is simple; the commercial applications are specific; and the finding that even expert buyers are fully subject to its effects changes the stakes of getting the first number right.

The mechanism: insufficient adjustment from an initial value

Tversky and Kahneman’s (1974) foundational research introduced anchoring and adjustment as one of the primary heuristics through which numerical estimation operates. When estimating an uncertain quantity, people start from an initial value — the anchor — and adjust toward their final estimate. The critical finding is that this adjustment is consistently insufficient: the final estimate remains biased toward the anchor regardless of its relevance or accuracy. The anchor does not need to be the correct price, a related price, or even a plausible price. Its presence is sufficient to bias all subsequent numerical evaluation.

In pricing specifically, the anchoring mechanism is powerful for a precise reason: prices are inherently uncertain for most products. The customer rarely has pre-existing, accurate knowledge of what a product should cost. The anchor therefore fills a genuine informational vacuum — and it does so automatically, through the same System 1 processing that handles all rapid estimation under uncertainty.

Why arbitrary anchors produce systematic effects

Ariely, Loewenstein and Prelec’s (2003) coherent arbitrariness research demonstrated the most extreme version of the anchoring effect in commercial contexts. Participants were asked to write down the last two digits of their Social Security number before bidding on products at auction. Those with higher Social Security number digits bid substantially more for identical products than those with lower digits. The anchor was demonstrably irrelevant to the product’s value; it was present; it was the first number they wrote; and it systematically shaped what they were subsequently willing to pay.

The commercial implication is direct and uncomfortable: the first number a customer sees when they encounter your pricing — whether that is the highest-tier option in a pricing table, the crossed-out original price above a sale price, or the first figure mentioned in a sales conversation — will anchor their willingness to pay regardless of its relationship to the product’s actual value. This is not a feature of unsophisticated customers. It is a feature of how numerical estimation works.

Why experts are not immune

Northcraft and Neale’s (1987) real estate study established the finding that most decisively changes how anchoring should be understood commercially. Professional real estate agents — with deep expertise in property valuation and access to objective market comparison data — provided property value estimates that were significantly influenced by the listing price anchor. The anchor shifted their valuations by up to 11%. Professional expertise does not eliminate the anchoring effect; it reduces it marginally and inconsistently at best.

This finding is directly applicable to B2B pricing conversations. The experienced procurement professional, the sophisticated investor, and the domain-expert buyer are subject to the same anchoring mechanism as the first-time consumer. The first price mentioned in any pricing encounter — whether on a landing page, in a proposal, or in a spoken conversation — is equally consequential regardless of the sophistication of the buyer.

The specific commercial deployments

Multi-tier pricing tables exploit anchoring deliberately. The Enterprise tier in a three-tier pricing structure (Basic, Professional, Enterprise) is often not primarily intended to generate Enterprise subscriptions. Its primary function is to anchor the customer’s reference point for what the product category costs — making the Professional tier feel comparatively affordable by contrast. The research on decoy pricing confirms this: adding a dominated or high-anchor option increases selection of the target tier by making it feel like a bargain relative to the highest option.

The was/now presentation is the most widely deployed anchoring mechanism in retail and e-commerce. The “was” price establishes the reference point; the “now” price is evaluated relative to that reference, activating loss aversion around the difference. The customer is not evaluating the current price against an objective sense of what the product is worth — they are evaluating it against the anchor, and the gap between anchor and current price activates the loss aversion mechanism that the prospect theory research predicts will weight that gap more heavily than the absolute current price.

Ariely’s (2008) analysis of The Economist’s subscription pricing structure illustrated the mechanism in a well-documented case. The addition of a print-only option at the same price as the combined print-and-digital option caused the proportion of customers selecting the combined option to increase substantially. The print-only option’s function was not to attract print-only subscribers — it was to anchor the reference point in a way that made the combined option feel like it contained free digital access.

What this means for the order of information in every pricing encounter

The anchoring research establishes a specific priority for pricing design: the sequence in which price information is presented determines the reference point within which all prices are evaluated. This applies to landing pages, sales conversations, proposals, and any other context where multiple prices or value figures appear.

The highest plausible number in a pricing structure should typically be the first number the customer encounters — whether that is the full-value price before a discount, the highest tier in a pricing table, or the stated value of what is included before the price is mentioned. Setting this number deliberately, rather than leaving it to whatever the customer happens to encounter first, is the single most commercially efficient anchoring decision available.

Books worth reading on this

Never Split the Difference by Chris Voss. Voss’s account of negotiation psychology — including his specific treatment of anchoring in high-stakes price negotiations and his tactical framework for setting anchors that shape the counterpart’s evaluation — provides the most practically applicable available treatment of the anchoring mechanism in conversation rather than in static pricing contexts. His specific techniques for extreme anchoring, counter-anchoring, and calibrated questions that reframe reference points map directly onto the Tversky-Kahneman mechanism in the contexts where pricing is determined through dialogue rather than through fixed price presentation. Alchemy by Rory Sutherland. Sutherland’s account of why psychological context determines perceived value more reliably than objective product characteristics — including his specific account of how the same product can be worth dramatically more or less depending on what it is anchored against — is the most thought-provoking available popular treatment of the anchoring and reference price mechanisms in commercial design.

If the dynamics described here are significantly affecting your wellbeing, speaking with a psychologist is the right next step. UK: Samaritans (116 123, free, 24/7). Mind (0300 123 3393). BACP: bacp.co.uk/search/Therapists. Crisis Text Line — text HOME to 741741 (US, UK, Canada, Ireland). International: internationaltherapistdirectory.com.

This article is for educational and informational purposes only. Sources: Tversky, A. & Kahneman, D. (1974), Judgment under Uncertainty: Heuristics and Biases, Science, 185(4157), 1124–1131. Ariely, D., Loewenstein, G. & Prelec, D. (2003), Coherent Arbitrariness: Stable Demand Curves Without Stable Preferences, Quarterly Journal of Economics, 118(1), 73–105. Northcraft, G.B. & Neale, M.A. (1987), Experts, Amateurs, and Real Estate: An Anchoring-and-Adjustment Perspective on Property Pricing Decisions, Organizational Behavior and Human Decision Processes, 39(1), 84–97. Kahneman, D. (2011), Thinking, Fast and Slow, Farrar, Straus and Giroux. Ariely, D. (2008), Predictably Irrational, HarperCollins. Kahneman, D. & Tversky, A. (1979), Prospect Theory: An Analysis of Decision under Risk, Econometrica, 47(2), 263–291. Ariely, D. & Kreisler, J. (2017), Dollars and Sense, Harper. Voss, C. (2016), Never Split the Difference, Harper Business. Sutherland, R. (2019), Alchemy, WH Allen.