How Steve Jobs Made People Cheer for the Price of an iPad
In January 2010, Steve Jobs walked on stage, dressed in his iconic black turtleneck and jeans. He knew this wasn’t just another product launch. It was a moment that would define the next decade of technology.
Jobs built anticipation by positioning the iPad as the “missing link” between a MacBook and an iPhone. For 75 minutes, he dazzled the audience. He demonstrated how you could watch a movie, read a book, and browse the internet—all on one beautiful device.
Then, it was time to talk about the price. The room fell silent.
Jobs set the stage brilliantly:
“If you listen to the pundits, we’re going to price it under $1,000.”
BOOM—a massive “$999” appeared on the screen behind him. The number hung heavy in the air. Nobody clapped. Nobody cheered. They were all trying to justify that price in their heads.
He let that anchor sink in.
By introducing a high anchor, Jobs made $999 the mental benchmark. Even though no one expected to pay that much, it felt like the price to beat.
Then, with perfect timing, Jobs delivered the punchline:
“We’re not going to price it at $999. The iPad will start at just $499.”
The audience erupted. People cheered for a price tag—something that rarely happens. Why? Because they weren’t comparing it to the actual cost of making an iPad. They were comparing it to the $999 anchor Jobs had planted in their minds.
It was a masterclass in price anchoring. Jobs didn’t lower the price of the iPad. He lowered the perceived pain of the price. If Steve Jobs could use it to make a $499 gadget feel like a steal, imagine what it could do for your e-commerce business.
What is Price Anchoring?
Price anchoring is where consumers rely heavily on the first piece of information they receive. It sets a mental benchmark, influencing how they perceive all subsequent prices. This is why a $499 iPad seemed like a steal compared to the $999 anchor Jobs displayed.
Whether it’s comparing two products on a website or seeing a strike-through discount on a price tag, the first number sets the tone. In e-commerce, this is a golden opportunity. When done right, price anchoring doesn’t just sell products—it creates a perception of value.
The Psychology Behind Price Anchoring
Research shows that seeing a price activates the same brain areas as physical pain. This is why price resistance exists. But anchoring helps by lowering the perceived pain—like comparing a $499 iPad to a $999 anchor.
A study by Carnegie Mellon found that changing one word in a pricing strategy reduced pain. Instead of saying “a $5 fee,” they said “a small $5 fee,” and conversion rates jumped. Small tweaks can have massive impacts.
The first number presented sets the expectation. Even if it’s never meant to be the final price, it influences how reasonable the actual price seems. The initial anchor becomes the reference point.
People buy based on emotion and justify it with logic. Anchoring appeals to emotions first, helping customers rationalize the purchase. This is why price anchoring isn’t just about numbers—it’s about storytelling and perception.
Types of Price Anchoring Strategies
High Anchor Strategy
High Anchor Strategy is about presenting the highest price first to make subsequent prices seem like a bargain. This technique relies on the psychological principle that the first number seen becomes the reference point.
For example, imagine you’re shopping for a car. The first model you see is the fully loaded premium version priced at $80,000. It has every luxury feature you could want. Then you see the base model priced at $50,000. It feels like a bargain in comparison—even though $50,000 is still expensive.
This happens because the high anchor set by the premium version makes the base model feel more reasonable. It’s not about the actual cost—it’s about the perception of value.
In e-commerce, this strategy is powerful. Displaying the most expensive version of a product first makes the other options feel more affordable. This isn’t about tricking the customer; it’s about setting expectations that make your pricing look better by comparison.
Decoy Pricing
Decoy Pricing involves introducing a seemingly unattractive option to make another price point more appealing. It’s not meant to sell but to nudge customers toward the more profitable choice.
Think about movie theater popcorn:
Small: $4
Medium: $7.50
Large: $8
The medium option is a decoy. It’s priced so close to the large that the large feels like a no-brainer. The theater doesn’t expect you to buy the medium—they use it to make the large look like a steal.
The Economist famously did this with their subscriptions:
Online-only: $59
Print-only: $125
Print + Online: $125
Nobody chose the “Print-only” option. It existed to make the “Print + Online” bundle look more attractive. The decoy wasn’t meant to sell—it was meant to make the target price look like a bargain.
In e-commerce, you can use decoy pricing to direct customers to the product with the highest profit margin by introducing a less attractive option.
Daily Cost Breakdown
Daily Cost Breakdown reframes the price by breaking it down into smaller, more digestible costs. By showing the daily expense, it makes the total price feel more manageable.
For example, instead of saying “$365 per year,” say “only $1 a day.” It feels more affordable because people compare it to daily expenses, like a cup of coffee.
This strategy works because it minimizes the perceived pain of spending. A $600 annual membership sounds expensive, but “less than $2 a day” feels like pocket change. By breaking down the cost per day, you can make high-priced products feel more affordable.
This is especially effective for subscription services and high-ticket items. It’s about reframing the expense into a familiar context that feels more reasonable.
Mastering Price Anchoring for Your E-Commerce Business
Price anchoring is a powerful tool to maximize sales without lowering prices. By strategically setting expectations, you can make your products feel like irresistible deals. It’s not about manipulating customers; it’s about guiding perception.
Ready to increase your e-commerce sales without slashing prices? Discover how price anchoring combined with high-performance digital advertising can transform your revenue. At High Beam Marketing, we specialize in strategies that maximize your profits while maintaining your brand’s value.
Let’s chat about how we can help you implement price anchoring to grow your business.
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