Why it matters
The first number you see can become the benchmark for later comparisons. An independent reference helps reveal whether an apparent bargain actually fits the available alternatives.
A worked example
A coat first labelled £200 and then £120 can seem attractive because £200 becomes the reference. Comparing similar coats may tell a different story.
Illustrative example · simplified assumptionsA common mistake
Treating a discount from a high listed price as proof of good value.
Where the idea needs care
A reference price may carry genuine information. The problem is giving an arbitrary anchor undue weight.
Apply the idea
Explain this concept using a different example from your spending, work, business or a policy debate. State what stays fixed and what could change the result.
See the supporting infographic
The written explanation above is the main lesson. This image offers another way to remember it.
Sources and further study
Examples and explanations by Alibomics. Numeric illustrations are not current market quotations.