$25/month. Seems fair for this software.
*clicks toggle to monthly*
$39/month.
Wait, what?!
This price anchoring move isn’t just annoying. It’s backfiring spectacularly on companies who don’t understand how customer psychology actually works.
Let me break this down for you
When I see $25/month (annual billing) as the default display, I immediately anchor to that number in my head.
That’s now my reference point. That’s what feels “right.”
Then I discover I have to commit to a full year upfront? No thanks. I haven’t even used this product yet.
So I toggle to monthly and BAM: $39
Now I feel like I’m being punished for being cautious. The product hasn’t changed, but suddenly it feels 56% more expensive.
What these companies don’t understand
That initial anchor of $25 is now working AGAINST them, not for them.
Even if $39 is a steal compared to competitors, even if it delivers 10x ROI, I’m stuck thinking:
“This feels like a rip-off compared to what I was just offered.”
Here’s what companies should do instead
- Show the monthly price FIRST
- Then show the annual discount as a reward, not the monthly as a penalty
- Let me try before I commit (hello, free trials!)
- Focus on communicating value before pushing for long-term commitment
The brutal truth
If your pricing strategy makes potential customers feel tricked rather than valued, you’ve already lost.
Your fancy “conversion optimization” is actually a trust destroyer.
Think about it. Would you rather have:
- 100 annoyed customers who feel like they got the bad end of a deal
- OR 80 customers who feel like they got fair pricing and are excited to use your product?
I know which group will have higher retention and word-of-mouth referrals.
So ask yourself: Are you anchoring your prices to build trust or just to manipulate the short-term conversion rate?
Because I guarantee you’re not fooling anyone with that “annual toggle” trick. We see it. And we’re clicking away.