The Anchoring Effect

The anchoring effect is a type of cognitive bias—a systematic error in thinking that influences people’s judgment and decision-making—and refers to the propensity for people to place a lot of weight on the first piece of information they hear while making decisions. Decisions involving numerical values, such as prices, can benefit from anchoring.

Anchoring effect on buyers


Price Anchoring

Retailers are well aware of the value of price anchors as a tool for their pricing strategy. Many retail businesses publish the maximum retail price(MRP) on the price tags for their products. The MRP often serves as a benchmark or anchor for later decision-making for many people.

Customers may easily compare prices for the same or similar things when they shop online. Consider someone who wants to purchase a gadget and whose first online price is Rs. 2500/-. They desire a gadget, thus the first price becomes the anchor because they want that gadget. After that, every other gadget similar to that gadget is evaluated in relation to the Rs. 2500/- price range. The anchor price enables consumers to compare and evaluate goods and services, which they find to be enjoyable.


Retailers establish prices with the knowledge that customers consider expenses on a relative basis, as was previously noted. Some retailers never intend to charge the listed MRP; instead, they want customers to pay the bargain price. They “anchor” the customer to a higher cost. The lower advertised sale price appears and feels like a fantastic deal after the buyer is anchored at the higher MRP.

How to be not “Anchored”?

You can discover information beyond what is immediately available by shopping around at other retailers to learn the approximate cost of the good or service in the market. In this method, a customer may see that a discount is actually a cheap price in comparison to others and isn’t just being advertised to appear as such.

Online shoppers have the option to put products in a virtual shopping basket but wait to check out, perhaps thinking about it overnight.


Heuristics are used by people to form opinions about the environment they are in. Heuristics are used to make decisions rapidly rather than to make sure the choice is right or wrong. Shopping becomes easier and more enjoyable by using mental shortcuts to achieve what is desired.

Because consumers enjoy deals, they are more likely to buy when something is advertised as a good deal. Everything is based on a benchmark that customers use to determine whether something is “cheap” or “expensive.” Even though anchors can’t always be avoided, using a little bit of forethought when making a purchase can help customers look past the anchor.

When making a decision on a purchase or simply when making a numerical guess, keep in mind that numbers are arbitrary until they serve as a point of reference (an anchor).