What is the anchoring effect?
Anchoring is the influence of an initial value on a later estimate. A number can become a reference even when it is irrelevant to the question. Amos Tversky and Daniel Kahneman gave the effect a landmark treatment in their 1974 Science paper. This is a research milestone, not a claim that they invented every earlier use of reference prices. Read the original paper.
The idea at a glance
The original experiment: a number that should not matter
Participants saw a wheel produce 10 or 65, considered whether the percentage of African countries in the United Nations was above or below that number, then estimated the percentage. The median estimates were 25 and 45 respectively. These are group medians from a numerical judgement task, not willingness-to-pay figures or a predicted sales increase. 1974 anchoring demonstration.
The useful question for a business is what comparison a visitor brings to your price. A customer may compare a strategic service with a software subscription simply because both promise marketing help. Explain the scope of the work before expecting the price to make sense.
Why a reference can persist
One explanation is that people start from a value and move away from it insufficiently. Later work by Nicholas Epley and Thomas Gilovich distinguishes self-generated anchors from numbers supplied by an experimenter; the same adjustment story should not automatically be assigned to every anchoring result. Read their 2001 research.
For practical work, treat the first comparison as a hypothesis about customer understanding. Ask prospects what they expected to pay and what they expected to receive. If those answers differ dramatically, a clearer scope explanation may help more than a larger headline price.
What this evidence does not justify
The wheel experiment does not demonstrate that listing an expensive package first will make every visitor buy a cheaper one. A buyer may know the market, have a firm budget or reject a number they consider implausible. An expensive opening figure can also make the whole service feel inaccessible.
A reference price must have a defensible basis. Do not invent a “normally $5,000” price for something never genuinely offered on that basis. Do not compare a one-off diagnostic with a year of full service as if the deliverables were identical. The comparison should help a buyer understand the decision they are actually making.
How to apply it in your business
This is an original Maqtrix workflow to test. It is not a procedure proven by the cited study or a claim about results we have delivered.
1. Identify the comparison already in the customer’s mind
Review recent enquiries and ask three prospects what alternative they would choose without your service. Record the alternative, its scope and the customer’s expectation. Do not insert a price into the question: that would influence the answer you are trying to learn.
2. Define the unit of value
Make the period, deliverables, exclusions and responsibilities clear. A monthly service, a single project and an hourly rate cannot be compared without context. Put this explanation beside the price so customers do not need to reconstruct the offer from several pages.
3. Choose a reference you can substantiate
A real standard package, a documented customer budget or a clearly explained scope comparison can provide context. If using a customer’s cost estimate, show their assumptions and let them change them. Do not turn a hypothetical lost-revenue calculation into a factual claim.
4. Present the complete choice
Show the actual price, what is included and any optional costs together. A useful order is outcome, scope, price, next step. If you compare packages, give each one a legitimate audience and keep the least expensive suitable option easy to find.
5. Check understanding before testing conversion
Ask a few people to describe the offer back to you. Can they explain why the options differ? Do they believe the reference is credible? Rewrite confusing language before buying more traffic. A conversion increase caused by misunderstanding is a future support problem.
6. Test one presentation change
Compare the existing offer explanation with the revised reference and scope explanation. Keep the underlying price and service unchanged. Decide in advance what enquiry qualifies, how long you will observe and what increase in confused or unsuitable enquiries would make you stop.
A practical service-business example
Hypothetical agency example: one proposal explains a diagnostic, an implementation project and ongoing support as distinct jobs. Another simply lists three prices. Test whether the clearer version attracts enquiries suited to the service—not whether it pushes everyone into the largest package.
For Maqtrix’s CAD $999, 30-day test run, the useful facts are the time period, agreed work, included advertising spend and the review before any continuing plan. There is no need to add an invented crossed-out price. A prospect should understand the starting point and decide whether it fits their business.
What to measure
| Measure | What to record |
|---|---|
| Qualified enquiry rate | Suitable enquiries ÷ eligible visitors. Define “suitable” before collecting results. |
| Price comprehension | Ask what the price covers and what happens after the initial period. |
| Proposal acceptance | Accepted proposals ÷ comparable proposals; report the counts and scope. |
| Guardrails | Track price objections, cancellations, confusion and delivery margin. |
Define the outcome and observation period before launching. Where volume allows, compare randomly assigned, comparable groups and keep other changes limited. With a small customer base, begin with a usability pilot and report the actual counts. A before-and-after change is useful to investigate, but it does not by itself prove causation.
Use the first-party measurement guide to plan the records, and the campaign brief template to document the test.
Common questions
Is any high first price an anchor?
It can provide a reference, but a high number alone does not establish an anchoring effect. The observed change could also come from differences in scope, perceived quality or audience.
Should we list the most expensive package first?
Treat that as a test, not a rule. A simpler starting offer may work better for customers who need reassurance about affordability.
How is anchoring different from a decoy?
Anchoring concerns a reference value. A decoy changes the set of alternatives and their relative attractiveness. They can appear together but are different hypotheses.
Original sources and research notes
Researched October 7, 2026. Historical claims and findings are linked to the sources below. Company accounts are labelled as such. Business workflows, examples and interpretations are Maqtrix’s proposals, not independently established performance outcomes.
- Tversky & Kahneman (1974), Judgment under Uncertainty: Heuristics and BiasesOriginal paper; anchoring passage and numerical-estimation examples.
- Epley & Gilovich (2001), Putting Adjustment Back in the Anchoring and Adjustment HeuristicOriginal research distinguishing self-generated and experimenter-provided anchors.
Named brands and researchers are discussed for educational analysis. No affiliation or endorsement is implied.
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