Extreme Anchoring, Stealth Increases & Charging More For Less

Jan 29, 2016

 

Information on slack fill, and examples of extreme anchor pricing, "stealth" (hidden) price increases and charging more for less.

 

There are a few posts on this site about anchor pricing but a recent real-world example illustrates the practice taken to an extreme. In this case a headphone manufacturer released a new model at $55,000. The next most expensive model in their lineup is "just" $2,200. Still an incredible amount for headphones but, thanks to the anchoring effect, if seems like a bargain next to the $55,000 set.

Another post looked at charging more money for less product. In this example the product is soda, with a smaller can priced at a premium because it contains fewer calories. It seems strange, the idea of charging more for less, but the vendor clearly understands how people value their product... and that some customers are more interested in less calories than more soda. It would be cheaper to buy the larger can and throw some away, and price-sensitive shoppers might do that, but for people that place a higher value on the stated promise of fewer calories the smaller cans have a strong appeal (and a much larger profit for the vendor).

Hidden or "stealth" price increases are intended to evade notice by keeping the stated price the same while decreasing the amount of product. Coffee used to come in one pound cans, until stealth increases resulted in thirteen ounces of coffee being shipped in the same one pound can. The price stayed the same, so unless you noticed the fine print or the empty space in the can the effective price increase would escape notice.

That empty space in the can of coffee, box of cereal or bag of chips is referred to as "slack fill". Because of the potential for abuse is regulated, and slack fill is only allowed in certain situations.



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