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Money Minute: Price Anchor

Name: Money Minute: Price Anchor
Uploaded: 2024-11-05T22:00:27+00:00
Duration: 25 s
Channel: Shanli Liu, CPA, CTP
Description: In this one‑minute Money Minute segment, the speaker explains a simple pricing tactic called price anchoring. By adding a third product that is…

5 Nov 2024 · 0 min

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In this one‑minute Money Minute segment, the speaker explains a simple pricing tactic called price anchoring. By adding a third product that is significantly more expensive than the two existing offerings—yet only slightly differentiated—you create a decoy. This makes the original higher‑priced option appear more reasonable, prompting more customers to choose it. The speaker notes that roughly one in ten customers will purchase the ultra‑expensive decoy, while the presence of that decoy shifts many more buyers toward the higher‑priced of the original two options, ultimately increasing overall revenue.

Here's Money in Under a Minute. If you have two things that you sell, add a third thing that's way more expensive than your most expensive thing and make it just a little bit different so that then people are like, wow, these two are almost the same thing, but this one's like 1/10 the price of this one. And here's the crazy thing: 1 out of 10 people will just buy the super expensive thing. And the second thing is that now way more people will buy your more expensive of your original two options. More Money in Under a Minute.