This thread explains marketing tricks like price anchoring, showing how small price differences influence buying choices. Marketers use these strategies to make higher or middle-tier products more appealing, and consumers should be aware of these tactics. Understanding persuasion tools helps make smarter decisions. Creator’s Companion is a tool the author uses for content planning.
Sharing a bit of marketing strategy:
Creator's Companion has 3 versions, and 95% of customers buy the $229 bundle.
One way I encourage this is by making the price gap between the middle and top tiers smaller than the gap between the low and middle tiers.
This is an example of price anchoring, which is used all the time in marketing. You see it every single day, even if you don't realize it.
There are MANY ways you can use anchoring.
Here, I wanted to encourage people to buy the bundle, which is the top-end product.
But you'll often see anchoring used to make the MIDDLE option more attractive instead.
One example is @nathanbarry's pricing table for Authority (launched about 10 years ago, but it sticks in my head)
Level 3 is much more expensive than Level 2, making 2 seem like a steal.
Of course, there will always be certain people who do want the higher-end services (in this case, 1-on-1 consulting), so they'll buy the higher-end edition.
But for many marketers, the ~primary~ purpose of the high-end offering is the make the middle one look more appealing.
I'll note that the reason I've flipped this anchoring principle on its head and used it to push my top offering (instead of the middle) is because I don't want to offer a 1-on-1 package.
I've tried that - it worked well for $$$, but not for my own happiness.
I'm also not the only marketer doing it this way.
The makers of @AstraWP theme (one of the best-selling WordPress themes) do the same thing.
In the future, I may experiment with anchoring toward the middle again, once I have additional products for sale.
But for now, I truly believe the bundle is the best product we offer, so I want to do everything I can to market it well.
Another INCREDIBLY common usage of anchoring is with annual vs. monthly pricing.
Nearly every subscription will give you a discounted monthly rate if you pay annually.
Why?
It's all about LTV - Life Time Value.
If you can get someone to buy an annual plan at $5/mo, you've locked in at LEAST a $60 LTV.
Meanwhile, if the average monthly customer only stays for 5 months at $8/mo, you only make $40.
More on this:
@TomFrankly
@NotionHQ @itsgfreviews CPA isn't useful on its own, but it's incredibly valuable when measured against another stat:
LTV - Customer Life Time Value
LTV answers the question, "How much $$$ do we make over the entire time this customer is with us?"
Annual discounts benefit marketers AND consumers (if they stick around for 1+ years).
Why shouldn't you get a deal for being a long-term customer?
This structure is only disadvantageous to you if the product isn't worth sticking with for at least a year.
For this same reason, nearly every payment processor offers lower fees for businesses that sell at high volumes.
If I'm @PaddleHQ, I'll be more than happy to take less than 5% per transaction if I know I'll be processing millions/month in sales from one client.
Win-win.
Team vs. Solo pricing is a GREAT way to anchor for.
Often the only thing a SaaS business needs to differentiate these plans is to offer more than 1 team seat.
Solo customers only need 1 seat, and Team plan buyers are businesses who don't mind spending signifcantly more.
Here's another tool using several strategies at once:
- Free plan helps to acquire lots of users
- Pro sets a mental anchor; makes Starter seem like an even better deal
- Annual pricing gets you a 20% discount vs. monthly
Another great example:
I bought my first proper-fitting suit from @suitsupply (and I continue to buy my suits from them today - they rock).
After walking in, I committed to paying $500 for the suit after about an hour of fitting.
Afterwards, the salesperson asked if I wanted to look at ties and pocket squares.
Both were $50 each.
But I had already committed to $500 for the suit, so these numbers seemed small in my head.
So I bought one of each, and they got a $600 sale instead of $500!
If they'd pitched the $50 ties and pocket squares first, I would have been much less likely to buy.
In hindsight, I don't regret my purchase. My suit looks great, my tie and pocket square both look great, and I feel like the ensemble is worth at least $600.
BTW: Pay attention to this strategy when you buy a car as well.
It's only AFTER you've committed to spending $20,000+ on the car that they pitch you the $3,000 warranty.
In that context, it seems cheap.
Context, context, context.
Additionally, they'll almost always prioritize how the warranty ~barely~ affects your monthly payment, instead of focusing on its overall cost.
Car = $320 monthly payment
Car + warranty = $365 monthly payment
In the moment, the difference seems negligible.
Two lessons here:
1. As a marketer, look at how you can use anchoring. You'd be silly not to leverage it.
2. As a consumer, be aware when anchoring is being used, and pause to ask yourself if what you're buying is truly worth the listed price (regardless of other tiers)
It's important to note that anchoring and ~most~ other marketing strategies are not evil or distasteful.
They are simply tools of persuasion.
And if you think about it, you use tools of persuasion every single day, even in small, friendly interactions.
However, it is very useful to be aware of the tools of persuasion that people use every day - both in interpersonal interactions and in marketing.
The more you understand persuasion, the more rational your decisions will be.
If you're curious, I made a video a while back covering five additional strategies people use to be more persuasive:
Also:
I never learned any of this in my marketing classes back in college!
I learned it by deeply studying:
- Landing pages
- Pricing pages
- Checkout flows
You'll learn marketing best by:
1. Trying things
2. Engaging as a consumer and being DEEPLY observant while doing so.
P.S. - Creator's Companion is the exact @NotionHQ system I use for all my content planning (YouTube, blog posts, etc).
If you're a creator, you'll love it as well.
Also linking it so you can study the landing page 😁
Sharing a bit of marketing strategy:
Creator's Companion has 3 versions, and 95% of customers buy the $229 bundle.
One way I encourage this is by making the price gap between the middle and top tiers smaller than the gap between the low and middle tiers.This is an example of price anchoring, which is used all the time in marketing. You see it every single day, even if you don't realize it.
There are MANY ways you can use anchoring.
Here, I wanted to encourage people to buy the bundle, which is the top-end product.But you'll often see anchoring used to make the MIDDLE option more attractive instead.
One example is @nathanbarry's pricing table for Authority (launched about 10 years ago, but it sticks in my head)
Level 3 is much more expensive than Level 2, making 2 seem like a steal.Of course, there will always be certain people who do want the higher-end services (in this case, 1-on-1 consulting), so they'll buy the higher-end edition.
But for many marketers, the ~primary~ purpose of the high-end offering is the make the middle one look more appealing.I'll note that the reason I've flipped this anchoring principle on its head and used it to push my top offering (instead of the middle) is because I don't want to offer a 1-on-1 package.
I've tried that - it worked well for $$$, but not for my own happiness.I'm also not the only marketer doing it this way.
The makers of @AstraWP theme (one of the best-selling WordPress themes) do the same thing.In the future, I may experiment with anchoring toward the middle again, once I have additional products for sale.
But for now, I truly believe the bundle is the best product we offer, so I want to do everything I can to market it well.Another INCREDIBLY common usage of anchoring is with annual vs. monthly pricing.
Nearly every subscription will give you a discounted monthly rate if you pay annually.Why?
It's all about LTV - Life Time Value.
If you can get someone to buy an annual plan at $5/mo, you've locked in at LEAST a $60 LTV.
Meanwhile, if the average monthly customer only stays for 5 months at $8/mo, you only make $40.
More on this:An important note:
Annual discounts benefit marketers AND consumers (if they stick around for 1+ years).
Why shouldn't you get a deal for being a long-term customer?
This structure is only disadvantageous to you if the product isn't worth sticking with for at least a year.For this same reason, nearly every payment processor offers lower fees for businesses that sell at high volumes.
If I'm @PaddleHQ, I'll be more than happy to take less than 5% per transaction if I know I'll be processing millions/month in sales from one client.
Win-win.Team vs. Solo pricing is a GREAT way to anchor for.
Often the only thing a SaaS business needs to differentiate these plans is to offer more than 1 team seat.
Solo customers only need 1 seat, and Team plan buyers are businesses who don't mind spending signifcantly more.Here's another tool using several strategies at once:
- Free plan helps to acquire lots of users
- Pro sets a mental anchor; makes Starter seem like an even better deal
- Annual pricing gets you a 20% discount vs. monthlyAnother great example:
I bought my first proper-fitting suit from @suitsupply (and I continue to buy my suits from them today - they rock).
After walking in, I committed to paying $500 for the suit after about an hour of fitting.Afterwards, the salesperson asked if I wanted to look at ties and pocket squares.
Both were $50 each.
But I had already committed to $500 for the suit, so these numbers seemed small in my head.
So I bought one of each, and they got a $600 sale instead of $500!If they'd pitched the $50 ties and pocket squares first, I would have been much less likely to buy.
In hindsight, I don't regret my purchase. My suit looks great, my tie and pocket square both look great, and I feel like the ensemble is worth at least $600.BTW: Pay attention to this strategy when you buy a car as well.
It's only AFTER you've committed to spending $20,000+ on the car that they pitch you the $3,000 warranty.
In that context, it seems cheap.
Context, context, context.Additionally, they'll almost always prioritize how the warranty ~barely~ affects your monthly payment, instead of focusing on its overall cost.
Car = $320 monthly payment
Car + warranty = $365 monthly payment
In the moment, the difference seems negligible.Two lessons here:
1. As a marketer, look at how you can use anchoring. You'd be silly not to leverage it.
2. As a consumer, be aware when anchoring is being used, and pause to ask yourself if what you're buying is truly worth the listed price (regardless of other tiers)It's important to note that anchoring and ~most~ other marketing strategies are not evil or distasteful.
They are simply tools of persuasion.
And if you think about it, you use tools of persuasion every single day, even in small, friendly interactions.However, it is very useful to be aware of the tools of persuasion that people use every day - both in interpersonal interactions and in marketing.
The more you understand persuasion, the more rational your decisions will be.If you're curious, I made a video a while back covering five additional strategies people use to be more persuasive:Also:
I never learned any of this in my marketing classes back in college!
I learned it by deeply studying:
- Landing pages
- Pricing pages
- Checkout flows
You'll learn marketing best by:
1. Trying things
2. Engaging as a consumer and being DEEPLY observant while doing so.P.S. - Creator's Companion is the exact @NotionHQ system I use for all my content planning (YouTube, blog posts, etc).
If you're a creator, you'll love it as well.
Also linking it so you can study the landing page 😁
yes
Sharing a bit of marketing strategy:
Creator's Companion has 3 versions, and 95% of customers buy the $229 bundle.
One way I encourage this is by making the price gap between the middle and top tiers smaller than the gap between the low and middle tiers. ... This is an example of price anchoring, which is used all the time in marketing. You see it every single day, even if you don't realize it.
There are MANY ways you can use anchoring.
Here, I wanted to encourage people to buy the bundle, which is the top-end product. ... But you'll often see anchoring used to make the MIDDLE option more attractive instead.
One example is @nathanbarry's pricing table for Authority (launched about 10 years ago, but it sticks in my head)
Level 3 is much more expensive than Level 2, making 2 seem like a steal. ... Of course, there will always be certain people who do want the higher-end services (in this case, 1-on-1 consulting), so they'll buy the higher-end edition.
But for many marketers, the ~primary~ purpose of the high-end offering is the make the middle one look more appealing. ... I'll note that the reason I've flipped this anchoring principle on its head and used it to push my top offering (instead of the middle) is because I don't want to offer a 1-on-1 package.
I've tried that - it worked well for $$$, but not for my own happiness. ... I'm also not the only marketer doing it this way.
The makers of @AstraWP theme (one of the best-selling WordPress themes) do the same thing. ... In the future, I may experiment with anchoring toward the middle again, once I have additional products for sale.
But for now, I truly believe the bundle is the best product we offer, so I want to do everything I can to market it well. ... Another INCREDIBLY common usage of anchoring is with annual vs. monthly pricing.
Nearly every subscription will give you a discounted monthly rate if you pay annually. ... Why?
It's all about LTV - Life Time Value.
If you can get someone to buy an annual plan at $5/mo, you've locked in at LEAST a $60 LTV.
Meanwhile, if the average monthly customer only stays for 5 months at $8/mo, you only make $40.
More on this: ... An important note:
Annual discounts benefit marketers AND consumers (if they stick around for 1+ years).
Why shouldn't you get a deal for being a long-term customer?
This structure is only disadvantageous to you if the product isn't worth sticking with for at least a year. ... For this same reason, nearly every payment processor offers lower fees for businesses that sell at high volumes.
If I'm @PaddleHQ, I'll be more than happy to take less than 5% per transaction if I know I'll be processing millions/month in sales from one client.
Win-win. ... Team vs. Solo pricing is a GREAT way to anchor for.
Often the only thing a SaaS business needs to differentiate these plans is to offer more than 1 team seat.
Solo customers only need 1 seat, and Team plan buyers are businesses who don't mind spending signifcantly more. ... Here's another tool using several strategies at once:
- Free plan helps to acquire lots of users
- Pro sets a mental anchor; makes Starter seem like an even better deal
- Annual pricing gets you a 20% discount vs. monthly ... Another great example:
I bought my first proper-fitting suit from @suitsupply (and I continue to buy my suits from them today - they rock).
After walking in, I committed to paying $500 for the suit after about an hour of fitting. ... Afterwards, the salesperson asked if I wanted to look at ties and pocket squares.
Both were $50 each.
But I had already committed to $500 for the suit, so these numbers seemed small in my head.
So I bought one of each, and they got a $600 sale instead of $500! ... If they'd pitched the $50 ties and pocket squares first, I would have been much less likely to buy.
In hindsight, I don't regret my purchase. My suit looks great, my tie and pocket square both look great, and I feel like the ensemble is worth at least $600. ... BTW: Pay attention to this strategy when you buy a car as well.
It's only AFTER you've committed to spending $20,000+ on the car that they pitch you the $3,000 warranty.
In that context, it seems cheap.
Context, context, context. ... Additionally, they'll almost always prioritize how the warranty ~barely~ affects your monthly payment, instead of focusing on its overall cost.
Car = $320 monthly payment
Car + warranty = $365 monthly payment
In the moment, the difference seems negligible. ... Two lessons here:
1. As a marketer, look at how you can use anchoring. You'd be silly not to leverage it.
2. As a consumer, be aware when anchoring is being used, and pause to ask yourself if what you're buying is truly worth the listed price (regardless of other tiers) ... It's important to note that anchoring and ~most~ other marketing strategies are not evil or distasteful.
They are simply tools of persuasion.
And if you think about it, you use tools of persuasion every single day, even in small, friendly interactions. ... However, it is very useful to be aware of the tools of persuasion that people use every day - both in interpersonal interactions and in marketing.
The more you understand persuasion, the more rational your decisions will be. ... If you're curious, I made a video a while back covering five additional strategies people use to be more persuasive: ... Also:
I never learned any of this in my marketing classes back in college!
I learned it by deeply studying:
- Landing pages
- Pricing pages
- Checkout flows
You'll learn marketing best by:
1. Trying things
2. Engaging as a consumer and being DEEPLY observant while doing so. ... P.S. - Creator's Companion is the exact @NotionHQ system I use for all my content planning (YouTube, blog posts, etc).
If you're a creator, you'll love it as well.
Also linking it so you can study the landing page
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