What the "Anchor" can teach you about pricing your handmade jewelry



Every once in a while I get a question from a handmade jewelry artist that goes something like this:

"I want to show people what my jewelry is REALLY worth, so I'd like to put one stunning piece out at my booth that has a much higher price than my typical work. I'll write "sold" on the price tag so it creates an even greater sense that I'm worth a lot more than the other pieces they'll see. And the rest of the work will look inexpensive in comparison. What do you think?"

The logic the person is using is that the prospect will see the extravagantly-priced piece and associate the artist's work with high-end jewelry, and then feel relieved and satisfied that they can afford the "unsold" pieces that are still available at the booth.

Terrible idea.

Don't do it.

Ever.

The reason is because of a psychological concept known as the "anchor."

The "anchor" is the first number a person hears and which they begin to compare other future numbers to even if the anchor is incorrect, made up, or way off base.

The reason people do this is most likely because in the absence of other data, the anchor serves as a reference point.

This phenomenon is so powerful that when people were asked to guess the percentage of African countries that are UN members, their guesses tended to cluster around an anchor point derived by spinning a wheel of numbers.

Even though they KNEW the number was randomly generated, they still guessed something close to the anchor point.

What does that mean for our friends who want to put a knocked-out piece with a huge price tag front in center of their booths?

They will unwittingly scare prospective buyers off. That's because as soon as prospects see a huge price tag (and one that presumably they may not be able to afford) they may either (a) assume the artist's work is unaffordable for them or (b) see the other prices as so low that the jewelry is not of good quality.

Be careful about using ploys to create a sense of value or scarcity.

As the old saying goes, honesty is the best policy. Let your work speak for itself and price your jewelry higher because it is worth more. Not because you want people to think it's worth more.

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