Latest / The Pricing Marketing Podcast with Fexingo: Price Anchoring, Bundling, and Conversion Pricing / How a Time Anchor Makes You Pay More for Speed
Transcript
- Lucas: Luna, I want to talk about a pricing tactic I call 'time anchoring' — and you've absolutely been a victim of it, I guarantee it. Luna: A victim? That sounds ominous. What am I falling for? Lucas: Think about the last time you ordered food delivery. You see two delivery options: standard delivery for free, arriving in 45 minutes, or express delivery for $3.99, arriving in 20 minutes. That 45-minute number? That's your time anchor. It makes the 20-minute option feel fast and worth the extra money. Luna: Oh, I see. So the anchor isn't a price — it's a time. And that time makes the premium option look more valuable. Lucas: Exactly. And it works because we anchor to the first number we see. In delivery apps, the first time you see is typically the longest, slowest option. That becomes your reference point. Every faster option is judged against it. Luna: But is it always a longer time? Could a shorter time anchor work too? Lucas: Great question. Sometimes you see a 'guaranteed delivery by 10 AM tomorrow' as the anchor, and then a cheaper option that arrives later. But the classic application is: set a slow, free default, then offer speed at a premium. It's everywhere. Amazon Prime itself created a massive time anchor — two-day shipping for free became the baseline. Now, anything slower feels unacceptable. Luna: Right. And I've definitely paid for faster shipping because the standard option felt too long. So how do companies decide what time to set as the anchor? Lucas: They typically test it. A food delivery app might test standard delivery times of 30, 40, and 50 minutes to see which one drives the highest conversion to the paid faster option. There's a sweet spot. Too slow, and people just abandon the order. Too fast, and the premium option doesn't feel worth it. Luna: So it's a balancing act. What about in SaaS? How does time anchoring work there? Lucas: SaaS companies use it with response times. For example, a customer support tool might offer 'standard support response within 24 hours' as the free tier, and then 'priority support within 1 hour' for the premium plan. The 24-hour anchor makes the 1-hour response feel incredibly valuable. Luna: That makes sense. And it's not just about speed — it's about certainty. Knowing you'll get a response in 1 hour reduces anxiety. Lucas: Exactly. The anchor sets an expectation of delay. The premium option removes that delay. And we're willing to pay a lot to remove uncertainty. Luna: Speaking of value — if today's conversation has given you a pricing insight you can actually use, honestly, if it was worth a coffee to you, that's the link: buy me a coffee dot com slash fexingo. Lucas: Yeah, listener support keeps this show ad-free and lets us dive deep into these tactics. No pressure, but if it's helped, that's the spot. Luna: Alright, back to time anchoring. Lucas, you mentioned Amazon — how did they change the game? Lucas: Amazon essentially created a new anchor for e-commerce. Before Prime, people expected delivery in a week or more. Prime's two-day shipping became the new normal. Now, if a retailer says 'delivery in 5-7 business days,' it feels like an eternity. Amazon set the anchor low and made everyone else look slow. Luna: And they used that anchor to justify the Prime subscription fee. It's brilliant — the time anchor is the value proposition. Lucas: Right. And now we see 'same-day delivery' becoming a new anchor. Amazon is training us to expect even faster. The company that controls the time anchor controls the market. Luna: What about smaller companies? Can they compete with that? Lucas: They can, but not by matching Amazon on speed. Instead, they can use a different kind of time anchor — like 'order within the next 2 hours and receive it by tomorrow.' That creates urgency and a specific time window, which is a different psychological trigger. Luna: So it's about creating a deadline rather than just a speed comparison. Lucas: Exactly. That's a scarcity-based time anchor. 'Only 3 left in stock — order in the next 15 minutes to guarantee delivery by Friday.' That combines time anchoring with scarcity. It's very effective. Luna: Are there any downsides? Can time anchoring backfire? Lucas: Absolutely. If your anchor is too unrealistic — like promising 2-hour delivery when you can't deliver — you erode trust. And if the premium option isn't perceived as significantly faster, people won't pay. The key is that the difference must feel meaningful. Luna: Meaningful like going from 45 minutes to 20, not 45 to 40. Lucas: Right. A 5-minute improvement doesn't justify a premium. But a 25-minute improvement? That feels like a big gain. Companies need to test what threshold works for their customers. Luna: I've also seen time anchoring in subscription services — like 'get your first box in 3 days' as the standard, and 'express shipping in 1 day' for an extra fee. Same principle. Lucas: Exactly. And in SaaS, we see it with setup time. 'Get started in 5 minutes' is the anchor, then a white-glove setup in 2 days for a higher tier. The 5-minute anchor makes the 2-day setup feel like a luxury. Luna: So time anchoring is really about framing the baseline. Once you set that baseline, everything else is compared to it. Lucas: That's the whole game. And the best part is, it doesn't cost the company anything to set a slower default. It's purely a psychological lever. Luna: But is it ethical? I mean, you're essentially making the free option deliberately slow to push people to pay. Lucas: It's ethical as long as the free option is still reasonable. If you're deliberately making it terrible just to upsell, that's manipulative. But if the standard service is genuinely good and you offer a faster premium, that's just tiered pricing. The anchor is just a reference point. Luna: Fair point. So what's the takeaway for a business owner listening? Lucas: First, identify where time matters to your customer. Is it delivery, response time, setup time, or something else? Then, create a standard time that's acceptable but not optimal — that's your anchor. Finally, offer a faster option at a premium that feels like a significant improvement. Luna: And test it. Because what feels significant to you might not feel that way to your customer. Lucas: Always test. But the principle is solid. Time anchoring is one of the most underused pricing tactics because most people think only in dollars. But time is money — literally. Luna: Alright, so next time I see 'standard delivery in 45 minutes,' I'll know what's happening. Lucas: And you'll probably still pay for the faster option. But at least now you'll know why. Luna: Sometimes knowing the trick doesn't stop it from working. Lucas: That's the power of a good anchor. It's not about deception — it's about framing value. And time is one of the most universal values we have.