Latest / The Pricing Marketing Podcast with Fexingo: Price Anchoring, Bundling, and Conversion Pricing / How a 40 Dollar Wine Anchors a 10 Dollar Bottle
Transcript
- Lucas: Luna, you ever stood in front of a grocery store wine display and felt like you were being nudged — not towards the cheapest bottle, not towards the priciest, but towards something in the middle that just felt right? Luna: Absolutely. And I’ve always assumed that feeling is intentional. But how exactly do they engineer it? Lucas: Well, let’s start with a specific number. In a typical mid-tier grocery store, you’ll see a shelf with maybe 20 to 30 wines. The cheapest bottle is often around 8 to 10 dollars. The most expensive is maybe 40 to 50. But here’s the thing — the best-selling price point is almost never the cheapest. It’s the one right above it, usually around 15 to 18 dollars. Luna: Right, that’s the classic decoy effect. The expensive bottle makes the mid-range look like a deal. Lucas: Exactly. But there’s a more subtle layer. A 2025 study from the Journal of Retailing looked at actual checkout data from 300 grocery stores across the U.S. They found that when a store places a single high-priced bottle — say, a 40-dollar Napa Cabernet — right next to the entry-level wines, it shifts the entire purchase distribution. Shoppers who saw that anchor were 18 percent more likely to buy a bottle in the 12-to-18-dollar range rather than the cheapest option. Luna: So the anchor doesn’t just make the mid-range look reasonable — it actually drives people away from the lowest price point. Lucas: Correct. And the mechanism is what behavioral economists call relative comparison. When you see a 40-dollar bottle, your brain categorizes that as 'expensive.' Then the 10-dollar bottle looks 'cheap.' But 10 dollars feels risky — what if the wine is terrible? So the 15-dollar bottle becomes the safe compromise. It’s not cheap, but it’s not extravagant. It’s the Goldilocks option. Luna: I’ve definitely done that. I see a 12-dollar bottle and a 28-dollar bottle, and I think, 'Well, I’m not spending 28, but 12 seems too cheap — let me find something around 18.' Lucas: That’s the sweet spot. And retailers know it. In fact, some chains actively design their wine sections to maximize that effect. They’ll place a premium bottle — often one with a bright label or a known region like Napa or Bordeaux — at eye level on the left side of the aisle. Why left? Because in the U.S., people scan left to right. So you see the expensive one first, and that sets the anchor. Luna: So the anchor bottle isn’t necessarily meant to sell a lot. It’s a loss leader for the whole category. Lucas: Exactly. The anchor bottle might only sell a few units a week, but it drives margins on the mid-tier wines, which might have a 40 to 50 percent markup compared to the 15 percent on the cheap stuff. One grocery chain I looked at reported that after they introduced a single 35-dollar bottle in their wine section, overall wine revenue increased by 6 percent — even though the expensive bottle itself barely sold. Luna: That’s wild. And it’s not just wine, right? I’ve seen this in electronics — a 4K TV for 2,000 dollars makes the 1,000-dollar model seem reasonable. Lucas: Exactly. The same principle works in any category where quality is hard to judge. Spirits, perfume, even streaming tiers. Take spirits: a 70-dollar bottle of single malt scotch next to a 25-dollar blended whisky makes the 25-dollar choice feel like a bargain — even though the store might make more margin on the 25-dollar bottle. Luna: So the key is having a high-priced option that’s just plausible enough to serve as a reference point. If it’s too expensive, it’s ignored. If it’s too cheap, it doesn’t shift perception. Lucas: Right. The anchor has to be in the same category and feel legitimate. A 200-dollar bottle of wine would be ignored by most grocery shoppers because it’s outside their frame of reference. But a 40-dollar bottle — that’s aspirational but attainable. It says, 'This is the top of what you might consider,' and that frames everything below it. Luna: And the anchor doesn’t even have to be the most expensive on the shelf. It just has to be noticeably higher than the next tier. Lucas: Precisely. In fact, some stores use a 'super-premium' tier that’s only 20 percent higher than the premium tier, not 50 percent. That smaller gap still works because the brain is doing relative math. If the premium is 20 dollars and the super-premium is 25, the premium feels like a smart choice — even though both are above average. Luna: So the anchor doesn’t have to be extreme. It just has to be higher than what you want people to buy. Lucas: Exactly. And here’s a cool detail from that study: They tested two different shelf layouts. One had the anchor bottle on the left, and one had it in the center. The left-side placement boosted mid-range sales by 12 percent compared to the center. Why? Because when the anchor is on the left, you see it first, and then every bottle to the right is compared to it. If the anchor is in the middle, you’ve already scanned some cheaper bottles, so the anchor effect is weaker. Luna: So the order of scanning matters as much as the price itself. Lucas: Absolutely. And this is where in-store design becomes pricing strategy. Aisle placement, shelf height, even the color of the label — all of it influences which bottle becomes the reference point. One chain found that putting a gold-label bottle at eye level increased mid-range sales by 8 percent compared to a standard label at the same price. Luna: It’s almost like the anchor is a visual cue as much as a price cue. Lucas: Right. And the takeaway for marketers is: If you’re selling a mid-range product, make sure there’s a higher-priced option that looks legitimate and is placed first in the visual flow. That doesn’t mean you need a super-expensive option — just one that’s 30 to 50 percent above your target price. And make sure it’s visible, maybe with a premium-looking label or a known brand name. Luna: If these kinds of pricing conversations have sparked something you’ve actually used or thought about in your own shopping, honestly, a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that’s literally what keeps us making these deep dives ad-free. Lucas: Yeah. It’s a small group, but it makes a big difference. No ads, no sponsors — just listener support. So if you find value in understanding how the shelf is designed, that’s where you can help keep it going. Luna: And back to the anchor — I think one of the most practical takeaways is that you don’t need to invent a premium product from scratch. You can just introduce a higher-priced version of what you already sell, even if it’s a limited edition or a bundle with extras. That alone can lift your core product. Lucas: Exactly. In fact, a software company I know did this with their subscription tiers. They added a 'premium plus' tier that was 50 percent more than their premium tier — with a few extra features that didn’t cost much to build. Within three months, sales of the standard premium tier increased by 15 percent. The anchor tier barely sold, but it made the premium tier look like the smart choice. Luna: So the anchor doesn’t have to be a bestseller. It just has to exist. Lucas: Right. And that’s the beauty of price anchoring. It’s not about making the expensive option attractive. It’s about making the next option down look like a deal. And when you do it right, the customer feels smart, and the retailer gets higher margins. It’s a win-win — as long as you’re not the one buying the anchor. Luna: So next time I’m in the wine aisle, I’ll look for that 40-dollar bottle and know exactly what it’s doing.