20. Sorting prices from highest to lowest – on the price order effect

In previous lessons, we wrote about the anchoring effect, which aims to change the customer’s perspective on price. By using a high anchor point, a store’s offer can seem more attractive. However, that was a solution for individual products.

But how should prices be presented when we have a long list of similar products and want to maximize profits? Should products be listed in ascending or descending price order? Which one will result in higher total revenue?

This was tested in an experiment conducted on a pub’s beer menu¹. The test was divided into two stages, each lasting four weeks. In the first stage, the beer list was arranged in ascending order (from cheapest to most expensive). In the second stage, prices were arranged in descending order (from most expensive to cheapest).

Example menu from the first test (ascending prices)
Beer 1 — 5 PLN
Beer 2 — 6 PLN
Beer 3 — 6 PLN
Beer 4 — 6 PLN
Beer 5 — 8 PLN
Beer 6 — 8 PLN
Beer 7 — 9 PLN
Beer 8 — 14 PLN
Beer 9 — 14 PLN
Beer 10 — 15 PLN

Example menu from the second test (descending prices)
Beer 1 — 15 PLN
Beer 2 — 14 PLN
Beer 3 — 14 PLN
Beer 4 — 9 PLN
Beer 5 — 8 PLN
Beer 6 — 8 PLN
Beer 7 — 6 PLN
Beer 8 — 6 PLN
Beer 9 — 6 PLN
Beer 10 — 5 PLN

After selling over 1,100 beers, the results showed that the average price of beer purchased in the second test (descending prices) was about 4% higher than in the first test (ascending prices). This means that when higher prices appeared at the top of the list, the average price of sold beer increased.

The first reason is the anchoring effect. For customers, the reference prices were those at the top of the list. If the most expensive products were listed first, the following items seemed more affordable.

The second reason is loss aversion. In the case of an ascending price list, buying any subsequent item more expensive than the first is perceived as a loss of money. Therefore, customers find it harder to choose items from the bottom of the list. On the other hand, if the list is reversed and prices are sorted from highest to lowest, the loss is perceived not in price but in quality. Customers believe that the more expensive the item, the higher its quality. With each position further down the list, they must accept a greater loss, which they try to avoid.

It is important to maintain the customer’s perception that price is closely linked to quality. Without this, the effect observed during the experiment (called the “price order effect”) is greatly reduced.

The universality of the experiment was confirmed in the same publication by another study, this time on pens. Since the conclusions were the same in both cases, despite the industries being very different, the researchers claim the findings can be generalized and applied to other areas, such as e-commerce.

In summary, if customers associate product quality with its price, it is worth presenting products from most expensive to cheapest.

[1] Suk, Jiheon, and Lichtenstein, 2012, The Influence of Price Presentation Order on Consumer Choice