Latest / The Pricing Marketing Podcast with Fexingo: Price Anchoring, Bundling, and Conversion Pricing / How Multiple Anchors Compete in Your Mind
Transcript
- Lucas: You walk into a watch boutique, see a stainless steel Rolex Submariner tagged at twelve thousand dollars. That price hits your brain. It's an anchor. But then you pull out your phone, check a secondary-market platform, and see the same reference listed at thirty-five hundred. Now you have two anchors, and they're pointing in opposite directions. Luna: Right — the conflict changes everything. Your brain doesn't just average them. It tries to figure out which one to trust. Lucas: Exactly. And that's the topic today: competing anchors. Most pricing conversations treat the anchor as a single number — the first price you see. But in reality, consumers increasingly encounter multiple anchors, sometimes within seconds. How do we reconcile them? Luna: Is there good research on this? I know the classic anchoring literature mostly uses a single reference point. Lucas: There's a really nice study from 2022 by Rashmi Adaval and Kent Monroe in the Journal of Consumer Research. They ran a series of experiments where participants saw either one anchor or two. When the second anchor was close to the first — say, a ten percent difference — it reinforced the first anchor. People's estimates became even more influenced by it. But when the second anchor was far — like a fifty percent gap — it actually weakened the original anchor's pull and created what they call 'anchor conflict.' Luna: So the watch example: twelve thousand versus thirty-five hundred is a huge gap. That's not reinforcing anything. That's a fight. Lucas: Right. And what happens in that fight? Participants in the study tended to choose a compromise option — something in between, even if that option wasn't presented. Their final estimate moved toward the midpoint of the two anchors. So in the watch case, you might end up thinking, 'Maybe a fair price is around seven or eight thousand.' That's the compromise effect from anchor conflict. Luna: Interesting. So for a seller, introducing a second anchor that's moderately lower could actually increase the perceived value of your offer — as long as it's not so low that it feels unbelievable. Lucas: That's the strategic takeaway. Let's apply it to real estate. You see a house listed at six hundred thousand. Your agent mentions the appraisal came in at five fifty. Now you have two anchors. If you're a buyer, the gap of fifty thousand — about eight percent — is close enough that the appraisal might reinforce your sense that the list price is fair. But if the appraisal was four hundred thousand, that's a thirty-three percent gap. Now you're in conflict mode, and you might start thinking the house is worth around five hundred thousand — the midpoint. Luna: And as a seller, you'd want to control the narrative. You'd introduce your own anchor — maybe recent comps at six twenty-five — to keep the buyer's reference point high. Luna: Yeah, exactly. In B2B software, this comes up all the time. You see a list price of ten thousand per seat per year. Then you hear from a friend at another company that they're paying six. Now you have two anchors. The vendor wants the list price to stick, but the competing anchor from social proof can undermine it. Lucas: Which is why some vendors are moving to 'no list prices' — they want to avoid creating a second anchor that might conflict. But others do the opposite. Amazon's 'compare at' feature is a deliberate attempt to create a competing anchor. They show a higher list price that you might not have seen otherwise, hoping it makes their selling price look like a bargain. Luna: Right — and that only works if the 'compare at' price feels credible. If it's obviously inflated, consumers discount it entirely. The anchor has to be believable to exert any pull. Lucas: That's a key point from the Adaval and Monroe research. They found that anchor conflict is strongest when both anchors are plausible. If one seems arbitrary or fake, it's ignored, and the other anchor dominates. So credibility matters. Luna: Let me ask a practical question: if I'm a consumer facing competing anchors, how do I decide? Is there a rule of thumb? Lucas: I think the most robust finding is that you should be aware of the conflict itself. When you notice two different price signals, pause. Ask yourself which anchor is more relevant to your actual use case. The watch example: the secondary market price reflects a different condition, no box and papers, maybe no warranty. The retail price includes full service and authenticity. They're different products in a way. Luna: And that's actually the seller's move — reframe the lower anchor as a different product category. 'That price is for a used model without papers. This is brand new with full warranty.' Suddenly the conflict resolves. Lucas: Exactly. You're not averaging anymore; you're segmenting. And that's a powerful cognitive tool. Let's take another case: you're shopping for a SaaS tool and you see list price one fifty per month. Your colleague says they got it for ninety. That's a forty percent gap. Now what? Luna: If you can, find out when the colleague bought. Pricing changes. If it was three years ago, it's a different product now. The anchor may be stale. Lucas: Right. Or if the colleague is in a different region — regional pricing is a thing. So you can defuse the competing anchor by contextualizing it. That's what skilled negotiators do: they introduce context to make one anchor seem irrelevant. Luna: I want to bring up a risk that the study also highlighted — choice deferral. When anchors are too conflicting, people sometimes just walk away. They can't decide, so they postpone the purchase. Lucas: Yeah, that's a real danger for sellers. If you're a marketer and you create too much anchor conflict — say, by showing a huge original price crossed out next to a sale price — some consumers get suspicious and leave. There's a sweet spot. The research suggests the second anchor should be about fifteen to twenty-five percent lower to be reinforcing, not conflicting. Beyond that, you risk paralysis. Luna: Speaking of paralysis — and I know this is a bit of a pivot — but it's funny how a small gesture can cut through all that complexity. I've been thinking about how listener support for this show works in a similar way. You see the value, but sometimes you need a nudge. Lucas: Yeah, and look — we keep this show ad-free intentionally, because we want to talk about pricing without any sponsor influence. And it's entirely supported by listeners who find it useful. If these pricing conversations have sparked something you've actually used in your work or life, a couple of dollars a month is genuinely what keeps these going. It's at buy me a coffee dot com slash fexingo. Luna: Exactly. It's that small anchor that makes a big difference. No pressure, just if it's added value for you. Lucas: So back to competing anchors. Let's talk about a real-world case where a company successfully managed multiple anchors. There's a well-known example from the luxury watch industry — not Rolex, but a smaller independent brand. They introduced a limited edition at eight thousand, and simultaneously published a 'heritage price' of twelve thousand — the price of a similar model from twenty years ago adjusted for inflation. That second anchor was far enough to create a sense of discount, but close enough to feel credible. Sales went up forty percent. Luna: Interesting — they used a historical anchor as the competing number. That's clever because it's objective and verifiable. You can't argue with inflation-adjusted historical data. Lucas: Right. And it's a technique that works in other categories too. Car dealerships sometimes show the MSRP from five years ago versus today's price. Real estate agents use 'list price' and 'estimated value from 2019.' The key is the gap has to be moderate. Luna: What about online auctions? You have a starting bid, a reserve price, and often a 'buy it now' price. That's three anchors. Lucas: Great point. In auctions, the starting bid anchors low, the reserve anchors the minimum acceptable, and the buy it now anchors high. Research by Ku, Galinsky, and Murnighan found that a high buy it now price actually increases final bids when the reserve is moderate, because it creates a range. Bidders anchor on the buy it now and then adjust downward, but not all the way to the reserve. Luna: So the buy it now acts as a competing anchor that pulls bids upward. That's counterintuitive — you'd think a high buy it now would scare people off. Lucas: It does if it's too high. But if it's within twenty to thirty percent of the reserve, it actually helps. The bidders feel like they're getting a deal if they win below the buy it now, even if they pay above the reserve. Luna: That reminds me of a study on 'doorbuster' sales. Retailers will show a 'regular price' that's maybe fifty percent higher than the sale price, but if the gap is too large — like seventy percent — consumers discount the regular price as fake. The sweet spot is around thirty to forty percent off. Lucas: Exactly. And that's the same principle: the competing anchor has to be within a plausible range. If it's too far, it's dismissed. If it's too close, it's not a conflict at all. Luna: So for marketers, the lesson is: if you're going to introduce a second price, make sure it's credible and within a fifteen to twenty-five percent window to reinforce, or up to forty percent to create a moderate conflict that leads to compromise — but not so far that it triggers distrust or deferral. Lucas: That's a solid rule of thumb. And for consumers, the takeaway is to recognize when you're being presented with competing anchors. Ask yourself: are both numbers relevant to this specific purchase? If not, discard the irrelevant one. If they are, consider whether the gap is small enough that one reinforces the other — in which case you might be overpaying — or large enough that you should look for a middle ground. Luna: And maybe the biggest takeaway is that anchoring isn't a single-shot effect. In today's information-rich world, we're constantly bombarded with multiple price signals. The skill is in managing that conflict consciously. Lucas: Exactly. The brain wants a single reference point. But the market gives us many. Understanding how they compete — and when to trust one over another — is a superpower for both buyers and sellers.