Latest / The Pricing Marketing Podcast with Fexingo: Price Anchoring, Bundling, and Conversion Pricing / How a Price Anchor Lifts Charity Donations
Transcript
- Lucas: So there's this nonprofit called 'GiveDirectly' — they send cash transfers to people in poverty. A few years ago, they ran a test on their donation page that's probably the purest example of price anchoring I've seen in years. Luna: Was it the one where they changed the suggested amounts from $50, $100, $200, to $100, $200, $400? Lucas: Exactly that. And the result was wild. When the lowest suggested donation was $50, the average gift was about $80. When they bumped the lowest anchor to $100, the average jumped to $115. A 44% increase — just by shifting the first number people saw. Luna: But that's not just anchoring, right? It's also the compromise effect — the middle option becomes more attractive when the options shift. Lucas: Right. The two things work together. The $100 anchor makes $100 the new baseline, and suddenly $200 looks reasonable. But the key is, they didn't change what donors could actually type in — the custom field was still there. They just changed the preset buttons. Luna: And that little nudge, no guilt, no pressure — just a different starting point. Lucas: Let's talk about what's happening psychologically. When you see a suggested donation of $50, your brain registers that as the norm. It's the reference point. Anything above feels generous, anything below feels cheap. So you anchor on that $50 and maybe round up to $60. Luna: But with a $100 anchor, now $60 feels stingy. And the $100 feels like the safe, fair choice. Lucas: Exactly. And this is why the anchor has to be credible. If a charity serving low-income families suggested $1,000 as the first option, people would feel manipulated and might leave. The anchor has to be within what the donor considers reasonable for that context. Luna: So there's a sweet spot. Too high and you're unethical, too low and you leave money on the table. Lucas: And that's where the research comes in. GiveDirectly tested four different anchor sets. The $50–$100–$200 set performed worst. The $100–$200–$400 set performed best. But the interesting part was that the $100–$200–$400 set also had a lower click-through rate — fewer people started the donation process. Luna: So there's a trade-off between conversion rate and average gift size. More people gave at the lower anchor, but each gave less. Lucas: Right — and if you're a charity, you care about total revenue. The $100 anchor produced about 25% more total revenue per visitor, even though fewer people donated. That's the anchoring effect in a nutshell. Luna: This reminds me of something you see in SaaS pricing. A lot of companies use a three-tier plan and the middle one is the most popular because it's the compromise. And they anchor the top tier high to make the middle look reasonable. Lucas: Exactly the same playbook. The difference is that charities are usually more careful about not appearing greedy. But the mechanism is identical: set a reference point that makes your target option look like the smart, safe choice. Luna: And you can do it with a single number, too. Some donation forms just say 'Donate' with no suggested amount. That's a missed opportunity. Lucas: Huge missed opportunity. Without an anchor, people have to decide from scratch. And research shows they tend to anchor on whatever mental number pops into their head — often a round number like $20, regardless of context. By providing an anchor, you're guiding them toward a more intentional decision. Luna: But there's a catch, isn't there? If the donor knows the charity's overhead costs or the impact of a dollar, they might reject the anchor. Lucas: Right, that's the 'knowledge' factor. An anchor works best when the buyer has no strong internal reference price. If you know exactly what a fair donation is for a cause, a $500 suggestion won't move you much. But most people don't have a precise number in mind — they're looking for a cue. Luna: And that cue can also be social proof. Like, 'Most donors give $100' — that's an anchor and a norm at the same time. Lucas: Exactly. That's why you see phrases like 'Join others in giving $50 a month' — it's anchoring plus conformity. And it works. Luna: If these marketing conversations have sparked something you've actually used in your own work, there's a way to support the show. It's low-key, no pressure — but listener contributions are what keep this podcast ad-free and independent. Lucas: Yeah, we've never run ads, and we'd like to keep it that way. If you find value in episodes like this, you can buy us a coffee at buy me a coffee dot com slash fexingo. Luna: And speaking of coffee — that $12 coffee episode we did a while back — same principle applies. The anchor works even in everyday decisions. Lucas: Right. So GiveDirectly's test also had a fourth condition: they used the $100–$200–$400 set but added a line saying 'only 10% of donors give more than $500' — that was a subtle anchor for the custom field. It pushed average gifts even higher. Luna: So you're anchoring not just the preset amounts but also the ceiling for what's possible. Lucas: Precisely. And that's a technique you can use in any pricing context. If you sell a software product, you could say 'most teams choose the Pro plan at $99 per user' — that's an anchor and a social proof combo. Luna: But isn't there a risk of anchoring too high and scaring people off? Like, if a charity asks for $500, some people might think 'I can't afford that, I'll skip the whole thing'. Lucas: That's the conversion versus revenue trade-off again. And it's why you test. For GiveDirectly, the $100 anchor was the sweet spot. But for a different cause — say, animal rescue where the average gift is lower — a $50 anchor might be better. You have to know your audience. Luna: So the lesson for marketers: don't just set a price and hope. Use anchoring deliberately, test different reference points, and monitor both conversion and average order value. Lucas: Exactly. And remember that the anchor doesn't have to be a number. It can be a story. Some charities say 'Just $1 a day can feed a child for a month' — that's an anchor framing. $1 a day sounds small, so you anchor on that low cost, and then the ask of $30 a month feels easy. Luna: That's the 'per day' trick. Restaurants do it with wine by the glass, too: $10 a glass sounds reasonable, but that's $60 a bottle. Lucas: Right — unit pricing is a form of anchoring. And it works because it breaks down the total into a digestible anchor. Luna: One thing that surprised me in the GiveDirectly case was that they didn't even need a decoy. The high anchor alone did the work. Lucas: Well, they had three tiers, so the $200 and $400 acted as decoys for each other in a way. But the first tier is the real anchor — it's the one that sets the baseline. The others just make the middle look like a compromise. Luna: So if you're running a charity campaign, the single most important number on your page is the lowest suggested donation. Lucas: I'd argue that, yes. That number is your price anchor. Get it right, and you lift everything. Get it wrong, and you're leaving money on the table or alienating donors. Luna: And testing is free. You can run an A/B test on your next email blast or landing page in a day. Lucas: Exactly. So to wrap up: anchoring isn't just for consumer goods. It's for any ask — whether it's a donation, a subscription, or a service fee. And the best anchors are credible, context-specific, and tested. Use them wisely. Luna: And ethically... I think that's a conversation for another episode, maybe. Because there's a fine line between nudging and manipulating. Lucas: Totally agree. And we should do that — the ethics of price anchoring. But for now, start by looking at your own 'ask' page. What's the first number your customer sees? Luna: Good question to leave on. I'll be checking mine tonight. Lucas: Same. Thanks, Luna. Luna: Thanks, Lucas.