Anchor Pricing (Price Setting)

Owned by Ondřej Tesař
Sept 30, 2024
2 min read

Anchor Pricing means that a product price is based on another product’s price (Anchor) and an anchor factor by which we multiply this price. Note that this means that the price of the anchor product must be calculated using some other strategy.

Calculation

The formula for anchor pricing is:

Price = AnchorPrice * ( 1 + AnchorFactor% )

where:

  • Anchor Price – Price of an “anchor” product. It is available in a price list/grid in either in the Final Price or Final List Price fields.

  • Anchor Factor – Percentage value.

    • Stored in the Company Parameter “AnchorData” for each SKU, or in another table (the table is configurable).

  • Anchor Product – The information which product is an anchor of which product is stored together with the information about Anchor Factor.

Limitations

  • You cannot specify an anchor for an anchor, etc. Only one level of connection is possible.

  • All connected products must be added to the same price list/grid.

  • Because of technical limitations, Anchor Pricing should not be used in the same price list/grid with Kit Pricing.

References

Use Case Examples

Anchor pricing is a pricing strategy that uses the price of a related product as a reference point to set the price of another product. Here are some use cases for anchor pricing strategy:

  1. Premium Pricing – If your company offers both premium and standard products in the same category, you can use anchor pricing to set premium pricing by setting the premium product price higher than the standard product price. The anchor factor for premium products could be a percentage value over the standard product price.

  2. Compatibility Pricing – If your company has a product line that includes multiple versions with different features and prices, you can use anchor pricing to set the prices for the versions with fewer features. The anchor product would be the version with all the features, and the anchor factor for the version with fewer features would be a percentage value below that of the anchor product.