The product and final price can be identical, yet the crossed-out number makes the offer feel like a bargain.
That reaction is an example of anchoring. Once we see an initial number, we tend to use it as a reference point when making the next judgment—even when the first number is not the most useful measure of value.
Researchers Amos Tversky and Daniel Kahneman described anchoring as one of the mental shortcuts that can influence judgment under uncertainty. In shopping, an original price, manufacturer’s suggested retail price, or prominent “was” price can become the anchor against which the sale price is evaluated.
The discount answers the wrong question
A markdown tells you how the seller is framing the current price. It does not necessarily tell you:
- what comparable products cost;
- whether the item suits your needs;
- how long it will last;
- whether the original price was commonly charged;
- whether a lower price is available elsewhere; or
- whether buying the item is a good use of your money.
A 50% discount can still leave a product overpriced. A product with no discount at all can still be the better value.
Truthful reference prices are not inherently improper, and legitimate discounts exist. The Federal Trade Commission states that price-comparison and sale-price claims are subject to truthfulness standards. The practical issue for shoppers is that even a valid original price can influence judgment more than it deserves.
Separate value from the markdown
Before looking at the claimed savings, try to estimate what the item is worth to you. Consider the function, quality, expected use, alternatives, return policy, and total cost.
Then ask three questions:
Would I buy this without the sale sign?
If the answer is no, the discount may be creating the desire rather than improving a purchase you already intended to make.
What do comparable products cost?
Compare the final price with similar products—not only with the seller’s original number. Make the comparison as close as possible in quality, size, features, warranty, and service.
Is it worth the final price to me?
The amount “saved” is not money in your pocket if you would not otherwise have bought the item. The relevant cost is what leaves your account today.
Watch for stacked anchors
Retailers can present several reference points at once: an original price, a limited-time sale, a coupon, loyalty points, free shipping, and a message that only a few items remain. Each element makes the purchase feel more urgent or valuable.
Slow the decision down and calculate the complete price, including taxes, fees, required accessories, subscriptions, financing costs, and return shipping where applicable. A low headline price can be a poor value once the full transaction is considered.
Urgency also deserves scrutiny. If the purchase is not essential, stepping away for a day can weaken the anchor and make the final price easier to evaluate independently.
Create your own anchor
The best defense against a seller’s reference point is a reference point based on your own research.
For a planned purchase:
- Define the features you actually need.
- Set a budget before shopping.
- Compare final prices across multiple sellers.
- Review price history when reliable information is available.
- Decide what would make the purchase worthwhile before seeing the promotion.
This does not eliminate emotion from shopping. It changes the order of the decision so the sale sign does not get the first word.
The bottom line
An original price can be useful information, but it is not proof of value. Treat it as one data point supplied by the seller—not as the standard your decision must follow.
Ignore the percentage-off headline long enough to judge the product and final price on their own. A markdown is not savings unless the purchase still makes sense.
Important information: Important information: This material is for general educational purposes only. Prices, promotions, product quality, and offer terms vary. Verify the current total price and applicable conditions before purchasing.
