Latest / The Pricing Marketing Podcast with Fexingo: Price Anchoring, Bundling, and Conversion Pricing / How a $95 Bottle of Wine Explains Price Anchoring
Transcript
- Lucas: You walk into a mid-tier steakhouse. The kind with white tablecloths but not quite Michelin-starred. You open the wine list. Luna: And your eyes land on a cabernet for ninety-five dollars. That's nearly half the price of a full dinner for two. Lucas: Right. And almost nobody orders it. But the restaurant didn't put it there by accident. That ninety-five-dollar bottle is a phantom anchor. Luna: A phantom anchor — I love that term. It's a price point that exists not to be bought, but to make everything else look like a deal. Lucas: Exactly. So suddenly, the forty-two-dollar bottle looks reasonable. The fifty-eight-dollar bottle looks like a splurge but still sensible. The ninety-five-dollar bottle? That's the decoy's decoy, really. Luna: And this isn't just restaurants. You see it in software pricing tiers — the 'Enterprise' plan at three hundred dollars a month that's clearly not meant for small teams. Lucas: If today's episode sparks something you end up using — maybe you glance at a menu or a pricing page a little differently — that's exactly the kind of thing listener support helps keep coming. We keep this show ad-free because of people who chip in at buy me a coffee dot com slash fexingo. Luna: Yeah, honestly it takes two minutes and it makes a difference. Alright, back to the anchor. Lucas: So why does the phantom anchor work? It's about reference points. Your brain doesn't evaluate price in a vacuum — it compares. Give it a high number first, and everything below that feels like a bargain. Luna: Dan Ariely's experiments on this are classic. He showed people three subscription options — web-only, print-only, and print plus web. The print-only was priced exactly the same as print plus web, so it was dominated. Almost nobody chose it, but its presence made the combo look like a steal. Lucas: That's the Economist subscription study from 2008. And it's still taught in every marketing class because it works. The dominated option — the phantom — doesn't need sales. It just needs to exist. Luna: So what makes a good phantom anchor? It can't be absurd. If the steakhouse listed a bottle at four hundred dollars, it'd feel disconnected — you'd dismiss it as irrelevant. Lucas: Right. The anchor has to be plausible. It needs to be within the same category, same quality range, just noticeably higher. A ninety-five-dollar bottle of wine at a steakhouse is plausible. A four-hundred-dollar bottle might trigger skepticism — 'who buys that?' — and break the spell. Luna: There's also the decoy effect — we covered that in episode three — but the phantom anchor is a specific subset: it's a decoy that you don't expect anyone to buy. The decoy we talked about before was a middle option that shifts preference. This is a high-end option that shifts perception of all other prices. Lucas: And it works in non-obvious places. Take charity donation tiers. A nonprofit might list suggested donations: twenty-five, fifty, one hundred, and five hundred dollars. The five hundred is a phantom. Few give that, but it makes the hundred-dollar tier feel like the 'generous but not crazy' choice. Luna: I've seen that with museum memberships. The 'Patron' level is often two or three times the next tier, and it's clearly not meant for the average visitor. It makes the 'Supporter' tier at seventy-five dollars feel like the smart pick. Lucas: Exactly. And there's a subtle risk: if the phantom is too far out, it can backfire. Some coffee shops tried a twenty-five-dollar latte as a stunt — that's not a phantom, that's a joke. People laughed, but it didn't make the four-dollar latte seem like a better value; it just made the whole menu feel gimmicky. Luna: So the plausibility threshold matters. What's the rule of thumb? A phantom priced around thirty to fifty percent above the next tier? Or is it more context-dependent? Lucas: Context-dependent. But studies suggest a premium of about forty to sixty percent over the highest intended seller. If your target price is fifty dollars, a phantom at seventy-five or eighty can work. Double the price might be too much unless the category supports it — like luxury goods, where extreme pricing is part of the brand. Luna: So for a SaaS product with a 'Pro' plan at thirty dollars a month, an 'Enterprise' plan at forty-five might be too close. It needs to feel like a different tier entirely — maybe seventy-five or ninety. Lucas: Right. And the naming helps. 'Enterprise', 'Platinum', 'Executive' — those signal a different audience. The phantom isn't for you. It's for the CEO of a Fortune 500. That lets you ignore it and feel smart for picking the 'Professional' tier. Luna: One thing I find fascinating: phantom anchors can shift perceived value even when the buyer knows what you're doing. I've seen studies where people were told 'this is a decoy price' and it still influenced their choices. Lucas: That's the power of anchoring — it's automatic. You can't unsee the high number. Your brain has already adjusted. It's like when you walk into a car dealership and the first car they show you has a sticker at fifty thousand. Suddenly the thirty-five-thousand-dollar one feels reasonable. Luna: And that's why dealerships always show you the loaded model first. It's a classic phantom anchor move. Lucas: So how do you use this ethically? I think the line is: are you informing choice or manipulating it? A phantom anchor that helps a customer see the value of a genuine option — that's fine. A phantom that tricks someone into buying something they don't need — that's problematic. Luna: I'd add: if the phantom tier exists and is actually purchasable, it's more defensible. If it's a fake price designed only to deceive, that's where it gets shady. A real wine on the list that's expensive but legitimate — fine. A made-up price that nobody can actually buy — that's crossing a line. Lucas: Great point. And most successful examples are real products or services that some customers genuinely choose. The phantom isn't a ghost — it's just a niche. The restaurant might sell one ninety-five-dollar bottle a month to a wedding party. That's a real transaction. Luna: So the lesson for marketers: before you set your pricing tiers, ask yourself — what's going to be the anchor? Is it your premium option, your most popular, or a dedicated phantom? And can you defend its existence? Lucas: And test it. Run an A/B test with and without a phantom tier. You might see conversion to the middle tier jump by ten or fifteen percent. That's not trivial. Luna: I want to circle back to that steakhouse example. Next time I'm handed a wine list, I'm going to look for the phantom. And I'll probably order the second-cheapest bottle — because that's often the sweet spot. Lucas: Which is itself a pricing strategy — the 'second cheapest' is a classic anchor play. But that's a topic for another episode. Luna: Fair enough. So to wrap: phantom anchors are powerful when they're plausible, visible, and genuinely available. Use them to frame value, not to deceive. Lucas: And if you're a listener who wants to see more episodes like this — we'd love your support at buy me a coffee dot com slash fexingo. It keeps the show ad-free and lets us dig into topics like this one. Luna: Thanks for being here. See you next time.