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Posted: 6:00 a.m. Tuesday, April 8, 2014

Price anchoring catches on at retail

Making up fake prices just to slash them is all the rage



By Clark Howard

ClarkHoward.com


Let’s say you’re out in the stores and you see two sets of sheets, both on markdown.

One was originally $150 marked down to $69, and the other was originally $99 now marked down to $49. Most people go for the former, the one with the bigger “was/is” difference.

But what if you learned the original price – the “was” – was just a made-up number? More and more retailers are doing what’s called “price anchoring,” which means making up a fake price just to slash it.

You may have heard recently that StubHub went to an honest policy of disclosing all junk fees up front on tickets they sell. Well guess what? People didn’t like it and the company reportedly had a decline in sales.

And you may know that when J.C. Penney went to honest pricing, people stopped coming in the store. The company basically went on life support until they reversed course and got back to “sales.”

The reality is we’re willing to pay more for an item because we think it’s a bigger discount.

So be aware of this. Sometimes you’ll find a legit deal, but you’ve got to know your pricing in order to know!

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