Price anchoring is a clever strategy used in luxury stores, and it works like this: Imagine walking into a high-end store and the first item you see is a belt priced at 1 lakh. That sets a mental ‘anchor’ for what things cost here. Then, you spot a pair of shoes for 50,000. Suddenly, compared to the belt, the shoes seem like a bargain.

This is the essence of price anchoring. By first presenting a more expensive item, the store sets your expectations high. When you see a less expensive item afterward, your brain automatically views it as more affordable, even though it’s still pricey.

Luxury stores use this tactic to make their high-end products seem more accessible. By strategically placing more expensive items next to slightly cheaper ones, they create a perception of value and affordability. It’s a psychological trick that encourages customers to spend more than they might have originally planned.

In short, price anchoring plays on our perceptions of cost and value, making us more likely to splurge on something we perceive as a ‘deal’ in the context of luxury pricing.

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