Behavioral Science For Brands: Leveraging behavioral science in brand marketing. Interview: William Poundstone, author of Priceless, on anchoring, fairness, and the myth of “fair value”
Oct 8, 2025
In this conversation, William Poundstone, author of Priceless, explores the intriguing realm of pricing psychology. He dives into the concept of anchoring, discussing how high-priced items can make others seem like bargains. Poundstone reveals the flat-rate bias in subscription services and its impact on consumer choices. He also shares how perceived fairness influences buying decisions and the psychology behind menu design tactics that drive sales. Ultimately, he emphasizes the importance of presenting multiple reasons for customers to perceive value.
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Coherent Arbitrariness Explains Price Disagreement
- People are poor at estimating absolute monetary value but good at ranking relative value.
- Poundstone calls this coherent arbitrariness: consistent hierarchy, arbitrary price levels.
Use Flat Rates To Drive Subscriptions
- Offer flat-rate access when convenience and simplicity beat per-use pricing.
- Expect many customers to underuse subscriptions while still paying the flat fee.
Anchor With An Outrageous High-Price Item
- Place an outrageously expensive item prominently to anchor higher willingness to pay.
- Use that anchor to make mid-priced items appear affordable and boost sales.
