• Phil RauPhil Rau, over 5 years ago

    This is an effect called "anchoring," a cognitive bias that affects how people perceive numbers in relation to the first number they see.

    A classic "lab-experiment" example of anchoring is this: If you ask a group of people to write down the last two digits of their phone number, then ask them to estimate the number of African countries in the United Nations, people who's random digits were higher will guess systematically higher than those whose digits resulted in a lower number. The first number you see in a situation "anchors" you, and you tend to skew any numbers following that number towards it.

    Similarly, with pricing, people will get accustomed to a certain price baseline in a product category and will interpret all other prices according to that baseline. Restaurants often anchor their customers by placing an expensive bottle of wine on the top of the list as a decoy, so that all the other bottles look inexpensive by comparison.

    With apps specifically, people are spoiled by many apps being free and the first apps being $0.99. Despite wild improvements in technology, app quality, and capabilities for apps, most people are still anchored to that low, low price tag. Similarly, many people are anchored to $5.99 for a cup of coffee, so it won't feel strange to them to refuse to pay $1.99 for an app they'd use every day, but gladly pay $4.50 for a mochaccino.

    29 points
    • Dylan SmithDylan Smith, over 5 years ago

      I was with you until you mentioned six bucks for a coffee. What?

      2 points
      • Phil RauPhil Rau, over 5 years ago

        I'm not much of a coffee drinker – I'm content with the office coffee. I was just guesstimating what Starbucks might charge.

        3 points
      • Adam RasheedAdam Rasheed, over 5 years ago

        $4.50's not bad for a latte at a decent coffee shop in the U.S.

        1 point
      • Aaron Wears Many HatsAaron Wears Many Hats, over 5 years ago

        Perth, Western Australia here. A flat white can easily cost you five to six bucks.

        0 points
        • Connor NorvellConnor Norvell, over 5 years ago

          is Australia as amazing as it seems like it is?

          1 point
          • Aaron Wears Many HatsAaron Wears Many Hats, over 5 years ago

            In what way?

            I do love it, there's something special about the land. However I would think everyone feels that way about where they're born. But the beaches are awesome, the bush is awesome. The city I'm in is pretty small in terms of culture... which is changing slowly... But most people who come to visit do love it.

            Melbourne/Sydney are the real hot spots if you're after city culture, Western Australia, Queensland and the Northern Territory are better if you're into the outdoors. Not all of the wildlife is out to kill you though. Just a fairly good majority of plants, animals, and fungi that are. But not all. ;)

            Living is a bit expensive though. And we've got some ass-backwards laws about stupid things, and our government is terrible. So it's probably just like [literally everywhere else in the world] in that regard. And buying a house is extremely expensive unless you want to live in the country (which isn't at all bad).

            It's certainly worth the visit though if you're ever interested in the place.

            1 point
    • Ryan RushingRyan Rushing, over 5 years ago

      Damn, +1 for bringing out the behavioral psychology. Didn't expect to see such good commenting on DN this early in the morning.

      1 point