Anchor Pricing - does it still work?

Today I was looking at business strategies and the term 'anchor pricing' came up. People said this is the key to develop a successful pricing strategies. Econsultancy interprets this term as 'to establishing a price point that your customers then use as a reference point for all future purchases' - sounds complicated to me. Although I am not a retailer, my curiosity urged me to look into this. 



Basically, when you are presented with an offer, the key element in the decision to accept or reject is whether you think it is a fair deal or not. Usually people would have a 'pre-set' price for a product or service in their head, and they will use this price to judge relative value. For example you know you would not pay £10 for an orange. right? Applying this to sale items. Do you notice that the original price is always listed along the sale price? This can give customers a reference point to 'anchor' onto, so they feel like they are saving money when they buy the items at sale prices. 

Anchor pricing does not apply solely to sale items. According to Neuromarketing, the key is to implant the numbers into customers' mind through any media, and this can impact the price they are willing to pay for various items. This works particularly well for unfamiliar products. You can display numbers on posters, or on other products. Believe it or not, it can still have an impact on their 'anchored price'!

The problem is, this may not work as well today since more and more customers are visiting the internet to compare prices before they make a purchase. Hence customers tend to have an idea of the 'real price' already before encountering your products/ services. I am not saying anchor pricing will never work again, but the key is to have accurate pricing data before you set your price. According to Econsultancy, 'your data source is the actual key to enable the development of an effective pricing strategy'.

From another point of view - why not set your own anchor price? Redefine your products and your services can weaken the tie to anchor pricing set by other retailers. Neuromarketing used Starbucks as an example. It has different ambience, food, display, and even coffee names (instead of small medium large, it even uses tall grande venti!) etc., to distinguish themselves from their competitors. This way they can set their own coffee price without a strong association with their competitors.