Latest / The Pricing Marketing Podcast with Fexingo: Price Anchoring, Bundling, and Conversion Pricing / How a Single Number on a Menu Changes What You Order
Transcript
- Lucas: So there is a restaurant in New York — it's a bistro on the Upper East Side, I'm not going to name it — and on their menu, buried under the burgers section, they list a cheeseburger for two hundred dollars. Luna: Two hundred dollars for a burger. And people actually order it? Lucas: Almost never. The owner told me they sell maybe one or two a year, and those are usually tourists doing it for the Instagram. But that burger is not on the menu to be sold. It's there to make every other burger look reasonable. Luna: So it's a pure anchor. It exists just to shift the reference point. Lucas: Exactly. And it works. When they tested removing that item, their overall burger sales dropped by about twenty-two percent over the next month. The same patties, same prices on the other burgers, but without that two-hundred-dollar number sitting at the top of the category, customers suddenly felt the thirty-dollar burger was expensive. Luna: That's a huge effect for a dish nobody buys. And it's not just restaurants, right? I see this in SaaS pricing all the time — the enterprise tier that's priced at ten thousand a month, with features most teams don't need, but it makes the five-hundred-dollar pro plan feel like a steal. Lucas: That's the classic three-tier menu. But there is something specific about the single absurd anchor — the one that's clearly not meant for you — that does something slightly different. It doesn't just make the middle option look good. It actually changes how you evaluate the entire category. Luna: How so? Lucas: Because it signals what's possible. A thirty-dollar burger at a bistro feels expensive if the next cheapest burger is twenty-two. But if there's a two-hundred-dollar burger on the same menu, thirty dollars now feels like the sensible, value-oriented choice. You're not paying a premium — you're being smart. Luna: Right, you reframe the decision from 'is this too much?' to 'I'm saving a hundred and seventy dollars.' Lucas: Exactly. And there's a famous study from the Journal of Gastronomy — it's actually from a few years back but it's still the best data point I've seen on this. Researchers worked with a chain of steakhouses and added a sixty-dollar prime rib to the menu, even though the highest-priced item before was forty-two dollars. They didn't expect to sell much of it, and they didn't. But sales of the forty-two-dollar cut went up by eighteen percent. Luna: So the premium item didn't cannibalize — it elevated. That's counterintuitive for a lot of business owners, who worry that adding a high price will scare people away. Lucas: And that fear is exactly why so many menus, and pricing pages, are under-anchored. They think the highest price should be the one they expect to sell the most of, or at least a reasonable ceiling. But the anchor doesn't need to be reasonable. It needs to be visible. Luna: What about the risk of the anchor being too absurd? Like, if you put a thousand-dollar burger on a menu at a diner, does it just look ridiculous and break the illusion? Lucas: That's the boundary condition. There's a threshold. The owner of that bistro told me they tested a five-hundred-dollar burger for a week, and it actually hurt sales of the other burgers. People thought the whole menu was a joke. So the anchor has to be extreme enough to stretch the range, but not so extreme that it discredits the context. Luna: So there's a sweet spot. How do you find it? Lucas: You test. But a good rule of thumb is the anchor should be roughly three to five times the price of the item you actually want to sell. In the bistro case, the target burger was thirty dollars. Two hundred is about six and a half times — maybe a bit high, but it worked because the restaurant itself is upscale and the two-hundred-dollar burger came with truffles and gold leaf. It wasn't just a number, it was justified. Luna: Justification matters. If the premium item doesn't look premium, the anchor crumbles. Lucas: Exactly. And this is where a lot of SaaS companies mess up. They put a ten thousand dollar enterprise tier on their pricing page, but the features listed are just 'priority support' and 'custom integrations' — nothing that visibly costs ten grand. The anchor has to feel like it could be worth the money, even if you're not buying it. Luna: So the two-hundred-dollar burger had truffles and gold leaf. What's the SaaS equivalent? Concierge onboarding? A dedicated account manager? A service-level agreement with uptime guarantees? Lucas: All of those. And ideally something that's a pain to deliver, so the customer thinks 'I don't need that, but I see why it costs that much.' That's the double move — you anchor the category upward, and you make the middle tier feel like the smart, no-fuss choice. Luna: I want to go back to the restaurant example for a second. You mentioned the burger anchor increased burger sales by twenty-two percent. But did it affect the rest of the menu? Like, did people order fewer steaks or salads because they were anchored on burgers? Lucas: Great question. In the bistro's case, total check size actually went up slightly, because the burger category became more prominent in people's minds. But there's a risk of category dominance. If you anchor too hard on one section, you might depress sales in others. The steakhouse study actually found that the sixty-dollar prime rib didn't hurt other categories, because it was in the same section. But if you put a two-hundred-dollar burger under 'specialties' and it's the only item, you might not get the category-wide lift. Luna: So the placement matters as much as the number. The anchor has to be inside the category it's supposed to elevate. Lucas: Right. It's not a general decoy — it's a category-specific anchor. And this is where I see companies make the mistake of putting their highest price on a separate 'enterprise' page. If the customer never sees it next to the other options, it doesn't anchor anything. Luna: It needs to be on the same page, same list, preferably at the top or to the right — where the eye naturally lands first. Lucas: Yes. Eye-tracking studies on menus show that customers typically scan the top-right corner first, then move left and down. So the most expensive item should be placed top-right, even if nobody orders it. That's where the anchor gets set. Luna: Which is exactly opposite of what most restaurants do. They put the cheap items there to seem welcoming. Lucas: And then they wonder why customers balk at the twenty-eight-dollar salmon. They've anchored low before the customer even gets to the salmon. Luna: Alright, so we've talked about menus and SaaS pages. Where else does this single absurd anchor tactic show up? Lucas: Car dealerships have been doing it for decades. That top-trim level with all the options — the one that's thirty percent more than the next trim — it's often not stocked on the lot. But it's on the window sticker, and it makes the mid-trim feel like the sensible choice. Luna: And the salesperson points to the high number first, so the customer's brain anchors there before they even look at the actual car they'll drive home. Lucas: Exactly. Real estate agents do the same thing. They show you the overpriced fixer-upper first, then the decent property that's still above your budget, and then the one they actually want to sell. By the time you see the third house, it looks like a steal. Luna: So it's a sequence — not just a single number, but the order in which you encounter numbers. Lucas: That's the deeper principle. The anchor is most powerful when it's the first piece of numerical information you receive about a category. After that, everything else is compared to it. Luna: I'm thinking about how this applies to my own decisions. I was shopping for a new laptop last week, and the first one I clicked on was the top of the line model at three thousand dollars. Then everything else under two thousand felt reasonable, even though I would have balked at fifteen hundred a year ago. Lucas: That's the anchor working exactly as intended. And the retailer knows it. That's why the 'featured' product on an e-commerce page is often the highest-margin or highest-price item, not the bestseller. Luna: So what's the takeaway for a marketer listening? How would you implement this tomorrow? Lucas: Pick one category — your main product line or your most popular service tier. Add one option at the top that is three to five times the price of your target seller. Make sure it looks premium, with features or materials that justify the cost. Put it on the same page, top-right or first in the list. Then watch what happens to your conversion rate on the mid-tier item. Luna: And if the anchor doesn't move the needle, test a different number or a different justification. But don't remove it too quickly. Lucas: Right. And that's actually a key point — if the anchor is working, you'll see the lift in your target product, not in the anchor itself. So don't judge the anchor by its own sales. Judge it by the sales of everything below it. Luna: That's a good rule. It's not about selling the two-hundred-dollar burger. It's about selling more thirty-dollar burgers. Lucas: And speaking of small things that shift behavior — if these marketing conversations have sparked something you've actually used in your own work, that's exactly the kind of signal we love hearing about. And listener support is what keeps this show ad-free and independent. Luna: Yeah, it's a small thing, but it makes a difference. If you've gotten value from the show, you can find us at buymeacoffee dot com slash fexingo. Lucas: Even a single coffee helps us keep digging into these pricing experiments and studies. Now, back to that steakhouse study — I want to tell you about a variation where they tested removing the anchor entirely and saw a different effect. Luna: Oh, interesting. What happened? Lucas: In a different phase of the same study, they replaced the sixty-dollar prime rib with a thirty-five-dollar burger — similar price to the mid-tier steak, but in a different category. That actually depressed sales of the forty-two-dollar cut, because the anchor was no longer in the same category. The burger became the new reference point for the whole menu, and suddenly steak felt overpriced. Luna: So the anchor's category placement is even more powerful than its price. If you put the wrong anchor in the wrong section, you can actively hurt your best sellers. Lucas: Exactly. That's the dangerous flip side. A well-placed anchor lifts the category. A misplace anchor can sink it. And that's why testing is non-negotiable. Luna: Alright, so to recap: pick a category, add an extreme but justified anchor, place it top-right, test it for at least a month, and measure the lift on your target item, not the anchor. Lucas: That's the playbook. And if you do it right, that two-hundred-dollar burger nobody buys might be the most profitable item on your menu. Luna: I'm going to look at every pricing page differently now. Lucas: That's the idea. Next episode, we'll look at how anchoring works in negotiations — specifically, why the first number you say in a salary talk sets the entire range.