Glossary > Price Anchoring

Price Anchoring

Price anchoring is a cognitive bias that refers to the tendency of individuals to rely heavily on the initial piece of information (the “anchor”) when making judgments or decisions. This initial information influences the perception of value and affects subsequent judgments about what is considered a reasonable price.

In SaaS (Software as a Service), price anchoring can be a pricing strategy used by companies to influence customers’ perception of value and encourage them to select a particular pricing tier or plan. Here’s how it works:

  1. Presenting multiple options: SaaS providers often offer different pricing tiers or plans with varying features and price points. By presenting multiple options, they provide a range of choices for customers to consider.
  2. Establishing an anchor: The SaaS provider strategically sets one of the pricing tiers as the anchor, which is usually the middle or high-end plan. This anchor serves as a reference point for customers when evaluating the other options.
  3. Manipulating perception of value: By placing a higher-priced plan as the anchor, the SaaS provider can create a perception of greater value for the other plans that are priced lower. Customers tend to compare the other options against the anchor and perceive them as more affordable or advantageous.
  4. Driving customers towards a specific option: The SaaS provider aims to steer customers towards selecting a particular pricing tier or plan that offers the best balance of features and price. By anchoring the pricing, they influence customers’ decision-making and increase the likelihood of selecting the desired option.

The goal of price anchoring in the SaaS industry is to guide customers towards selecting a plan that maximizes the perceived value and aligns with their needs, while also generating revenue for the provider. However, it’s essential for companies to ensure that the pricing remains fair and transparent, without exploiting customers’ cognitive biases.

Explore SaaS Topics

Explore XaaS Topics

Discover and learn all about SaaS, XaaS, and the Cloud.

Glossary Terms


Your go-to resource to break down the key terms you need to know about XaaS.

Ready to learn more about CloudBlue?

CloudBlue is a powerful XaaS platform that will help you grow revenue. Here are some resources for more information:

Subscription and Billing Management

Subscription and Billing Management

Our flexible subscription and billing solution can handle the most complex XaaS business models – and scale recurring revenue.

Partner and Channel Management

Partner and Channel Management

Cut through complexity and see more revenue from your channel business as you easily onboard and enable resellers across the globe – at scale.

Vendor and Product Information Management

Vendor and Product Information Management

Centralize all of your vendor and supplier contracts and streamlined product information on one platform.

Ready to
get started?

Sign up or talk with a CloudBlue
expert today to get started.

CloudBlue, an Ingram Micro Business uses Cookies to improve the usability of our site. By continuing to use this site and/or log-in you are accepting the use of these cookies. For more information, visit our Privacy Policy