Latest / The Pricing Marketing Podcast with Fexingo: Price Anchoring, Bundling, and Conversion Pricing / How a Private Jet Charter Anchors a 1000 Dollar Hotel Package
Transcript
- Lucas: You land at a private jet terminal. Not your jet — you're just browsing a charter company's website. And there, front and center, is a number that stops you cold: fifteen thousand dollars per hour for a Gulfstream. Luna: Per hour. That's essentially a year's rent for some people in one hour of flight time. Lucas: Exactly. Now, you're not in the market for a jet charter today. But the same company has a 'luxury hotel package' right below it — one thousand dollars a night at a five-star resort in the Maldives. Luna: And suddenly that thousand dollars feels almost reasonable. Like, compared to fifteen grand an hour, you're practically saving money. Lucas: That's the anchor doing its work. The fifteen thousand dollar charter rate resets your reference point. The hotel package isn't cheap in absolute terms, but it feels cheap relative to the number you just saw. This is a classic anchoring play, and luxury travel companies use it all the time. Luna: So they're not really trying to sell the jet charter to most people — it's there to make the hotel package look like a deal. Lucas: Right. And it works because your brain processes numbers comparatively, not absolutely. When you see a $15,000 anchor, $1,000 gets filed under 'affordable luxury' instead of 'expensive indulgence.' Luna: I remember reading about a similar tactic in fine dining. A restaurant put a $200 wagyu steak on the menu, and suddenly the $85 ribeye seemed like a steal. The $200 steak only sold a few times a week, but it boosted ribeye sales by thirty percent. Lucas: That's the same mechanism. The decoy item doesn't need to sell. It just needs to exist. In the travel world, the private jet charter is the decoy. The hotel package is the real product. And the anchor is so extreme that it shifts your entire sense of what a reasonable price is. Luna: Is there a specific example you're looking at here? Lucas: Yeah, there's a charter company based out of London — call them Jet Luxe. They list a Gulfstream G650 at £12,000 an hour, around $15,000. Then they have a 'bespoke hotel package' starting at £800 a night — that's about $1,000. The package includes transfers, spa credits, the works. But the key is the pricing page layout: the jet rate is the first number you see. Luna: So you're scrolling, you see the big number, you flinch, then you see the hotel package and think, 'Oh, that's not so bad.' Lucas: Exactly. And they're not hiding the jet rate. They're featuring it. It's in a bold font at the top of the page. The hotel package is below, but it's still prominently displayed. The contrast does the selling. Luna: What about the people who actually want the jet charter? Does the high anchor hurt their perception? Lucas: Interesting question. For the ultra-high-net-worth client who's considering the jet, the anchor is less about comparison and more about signaling quality. A $15,000 hourly rate signals exclusivity. But the real anchor play is for the broader audience — the aspirational luxury traveler who might book the hotel. Luna: So it's a two-tier audience strategy. The high price signals status to the wealthy, and it anchors value for everyone else. Lucas: Exactly. Airlines do something similar. Think about the way first-class fares are displayed. On a long-haul flight, a first-class ticket might be $8,000. Premium economy is $1,200. Economy is $600. The $8,000 fare anchors the entire page. Premium economy feels like a bargain relative to first class, even though it's double the economy price. Luna: And a lot of people end up upgrading to premium economy because it feels like a deal. Lucas: Right. The airlines are really selling premium economy. First class is the anchor. Economy is the fallback. Premium economy is the sweet spot. And the anchor is so high that the mid-tier price looks reasonable. Luna: I've seen data on this. One study from a major European airline showed that when they displayed first-class prices on the same page as premium economy, premium economy take rates went up by about eighteen percent. Lucas: That's a huge lift. And it's pure anchoring. The same pricing structure without the anchor — if you just showed premium economy and economy — would likely have a much lower conversion to premium economy. Luna: So the lesson for marketers is: if you have a premium product, don't be afraid to show a super-premium option that most people won't buy. It makes your main product look better. Lucas: But you have to be careful. The anchor has to be credible. If you're a mid-range hotel and you list a $10,000 suite, it might seem absurd rather than aspirational. The anchor has to be within the realm of possibility for your brand. Luna: So a four-star hotel might anchor with a presidential suite at $2,000, not $15,000. Lucas: Exactly. The anchor needs to be high enough to shift perception but not so high that it breaks plausibility. For Jet Luxe, a $15,000 jet charter is plausible because private jets actually cost that much. For a Marriott, a $2,000 suite is plausible. The key is that the anchor is real. Luna: And there's also a sequencing effect. Do you show the high price first, or the low price first? Lucas: Research says show the high price first. That's what Jet Luxe does. If you show the low price first, the high price looks even more extreme. But if you show the high price first, everything after it looks more reasonable. It's called the anchoring and adjustment heuristic — you anchor on the first number and adjust downward. Luna: So the order matters as much as the numbers themselves. Lucas: Absolutely. And this ties into something else: decoy pricing. In a classic example, The Economist offered three subscription options: web-only for $59, print-only for $125, and print plus web for $125. The print-only option was a decoy that made the print plus web seem like a great deal. No one bought print-only, but its presence boosted sales of the combo. Luna: That's the same principle. The decoy doesn't have to sell. It just has to make the target option look better. Lucas: And in travel, the private jet charter is the decoy. The hotel package is the target. But there's an extra layer — the jet charter also serves as a status signal. Even if you never book it, you remember that this company operates private jets. That elevates the brand. Luna: So it's a double win: anchor for pricing, and halo for branding. Lucas: Exactly. And that's why you see this tactic in luxury travel, but also in cars, watches, and even software. The 'enterprise' tier at $10,000 a month makes the 'professional' tier at $200 a month look like a steal. Luna: Quick honest thing — a handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many episodes. We keep it ad-free because of that support. Lucas: Yeah, it's a small group, but it makes a big difference. If these pricing conversations have sparked something you've actually used, that's where you can help keep the show going. Luna: So back to the anchor — are there industries where this backfires? Lucas: Yes. If customers feel manipulated, the anchor can erode trust. For example, if a hotel lists a 'regular rate' of $500 and then offers a 'sale' of $200, but the $500 rate is fake — it was never actually charged — customers catch on. The anchor has to be a real price that someone might pay. Luna: So transparency matters. The $15,000 jet rate is real. Someone does pay that. That's what gives the anchor power. Lucas: Exactly. And that's why Jet Luxe's strategy works. They actually charter jets at that rate. It's not a phantom number. The hotel package is a legitimate alternative for a different customer. The anchor is honest, and the contrast is genuine. Luna: What about the actual conversion rates? Do we know how well this works in practice? Lucas: There's some data from the travel industry. A study by a hotel booking platform found that when a luxury suite was displayed first on a property page, bookings for the next tier down — the 'deluxe' room — increased by about twelve percent. The suite itself rarely booked, but it pushed people to the mid-tier option. Luna: So the anchor doesn't just shift perception — it drives actual purchases. Lucas: Right. And the effect is strongest when the anchor is about two to three times the price of the target. In the Jet Luxe case, the jet is about fifteen times the hotel package. That's extreme, but it works because the categories are different — you're not comparing apples to apples. You're comparing a private jet to a hotel stay. The mind doesn't do a direct price per value calculation across categories. Luna: So the more different the categories, the more extreme the anchor can be. Lucas: Exactly. If you're comparing two hotel rooms, a two-to-one ratio is about right. But if you're comparing a jet to a hotel, you can go much higher because the value proposition is so different. Luna: One thing I find fascinating is that this works even when people know about anchoring. I've read behavioral economics books, and I still catch myself thinking 'that's not so bad' after seeing a high price. Lucas: That's because anchoring is a System 1 process — it's automatic. You can't turn it off. Even if you know the heuristic, the first number still affects your judgment. It's like a visual illusion: knowing it's an illusion doesn't make the lines look equal. Luna: So the best defense is to consciously decouple: ask yourself 'would I pay this price if I hadn't seen the anchor?' Lucas: Exactly. That's the practical takeaway for listeners. When you're shopping for a hotel or any luxury product, try to form an independent value judgment before you look at the prices. Otherwise, the anchor will set your reference point. Luna: And for marketers, the takeaway is clear: if you have a premium product, create a super-premium version — even if it's just a decoy — and feature it prominently on your pricing page. Lucas: But make it real. Don't invent a phantom price. Use a genuine high-end option that exists. That's what gives the anchor credibility. And sequence it first. Show the highest price before the mid-tier. Let the contrast do the work. Luna: So next time I see a $15,000 jet charter rate, I'll know what's happening. And maybe I'll actually consider the $1,000 hotel package. Lucas: That's the anchor's job — to make you consider it. Whether you book it is up to you. But at least now you know why it feels like a bargain.