Anchor Points

 

Although we focus on boardgames, cardgames, TCG and miniatures, we do carry comics as a sideline and participate in the annual Free Comic Book Day. I will leave it to other stores that focus more heavily on comics to discuss the ins, outs and successes of the event. However, an incident took place that got me thinking about behavioral economics and one of my favorite concepts therein, the anchor point.

I have mentioned the concept of the anchor point in past columns. Anchor points come into play when a business sets a price on a product in a category either higher or lower than normal which then causes consumers to re-evaluate their perceptions of the price on other items in the category based on the high or low priced item.

For example, Wal-mart often uses the anchor point to create a perception of low prices on everything within a category by reducing the price abnormally low on just one item. By reducing the price on, say, a TV to $149.99, the company sets a low anchor point for the other TVs it sells. The anchor point Wal-mart sets on that particular TV is lower than the price a customer would find on that particular television wherever they shopped. Wal-mart then prices its other televisions similarly to what other retailers sell price them but, because of the low anchor point, the other televisions are also seen as lower prices.

Anchor points are often used with high priced products, making them seem cheaper. A few years ago, during the GAMA Trade Show, I had the opportunity to have dinner with a couple of other store owners at Gordon Ramsay’s Steak. Now, when I typically go out to eat, I will spend $10 to $20 on a meal. However, at Steak, the average entre runs about $100. When a Porterhouse steak sells for $117, it makes the roasted chicken breast at $36 seem like a steal. Very few people order the Porterhouse steak. It is there to make other items on the menu look much more reasonably priced and lower customer resistance to purchasing them.

This is why I like to have expensive Magic cards on display at the store. We very seldom sell them but having a card in the case selling for four figures makes that $25 Mox Amber look much more reasonably price.

Anchor Points

Happened to catch a story on "anchor points" this morning on NPR and thought I would discuss how game and comic stores utilize such concepts in influencing your behavior.

The concept of the that having a high priced item for sale makes the prices of other items in the same place of business seem lower and more reasonable by comparison. Allow me to explain with a common example in restaurants.

The wine list in a restaurant will often have a list of what the customer might perceive as expensive wines and then one really expensive, say a series of vintages ranging from $20 to $60 per bottle and then one bottle priced at $500. The $500 bottle is an anchor point, making the other bottles appear cheaper by comparison and reducing your resistance to purchasing a more expensive vintage.

Stores especially that deal in single Magic and other TCGs as well as comic shops that deal in rare comics use the concept of the anchor point to reduce resistance to the purchase of a higher priced single card or comic book.

Say you have a Jace, the Mind Scuptor from a FTV:  Twenty set in stock at $70 and a Beta Bayou in stock selling for $1400. The $1400 card becomes the anchor point, setting the upper limit of price on the cards on display at $1400 and making the $70 Jace a bargain by comparison.

Similarly, a $2000 copy of a Superman comic from the 1940s, makes the $300 Spider-man comic from the 1960s seem comparatively reasonably priced.

The store may not plan to even sell the anchor item, though I am certain they would if someone offered the full price. Just having it there increases the likelihood of other items, otherwise perceived as expensive, selling.