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Pricing Compression: The Role of Insignificant Numbers on Our Purchasing Decisions

pricing compression Jun 21, 2022

Close your eyes and visualize for a moment.

Do you remember the last number that popped up on your phone’s caller ID? How about the price of gas at the station down the street?

You may not realize it, but these numbers can influence your next purchase.

When you don’t know anything about a product, you’re forced to estimate the perceived price value for the item. This is where insignificant numbers have an impact on your purchasing decisions.

We’re surrounded by insignificant numbers everywhere we go in life - bombarded with them throughout the day.

When you construct a perceived price value in your head, you take cues from your environment. More specifically, you take hints from insignificant numbers around you. These price hints are actually known as ‘anchors’. We’ve discussed them before.

What’s different today vs. the article from March, is while price compression is affecting the cost of cannabis products, we’re simultaneously seeing the cost of everyday items rising with the coming recession. Check out the Headset data below.

Canadian EQ Price of Flower from Jan 2020 until June 2022. EQ pricing has dropped an additional 10 cents since we last measured it in Feb 2022.

The more attention these higher-priced numbers get, the more influence they have.

Take the price of gas, for instance. We’ve been conditioned recently to watch the price of gas every day. This can have an impact on customers’ purchases.

Often, the higher the anchor prices surrounding a product, the more willing customers are to pay higher prices.

So, how can this information benefit brands and retailers?


  1. Examine numbers that could be influencing your customers’ perception of value (i.e., gas prices, your location address, pricing displays at the front of your store, etc.) High/low price points at the start of the customer journey will drive them towards less expensive options or to shop at a higher price point, depending on what you present at the beginning. Try some different options. Test and learn.
  2. Signage plays a huge role in perception. Signage showing “$2 Pre-rolls” will make it hard to sell any pre-rolls for more than $2
  3. Pick a local item and group it with higher/lower priced items. This ensures customers see value


  1. Evaluate what numbers are also present in your product collateral to watch for potential perceived value influencers
  2. Think about when it’s appropriate to spell a number, rather than use its numeric format (“6” is more memorable than “six”)

Understanding where we can utilize existing insignificant numbers to help encourage customers to purchase products with higher costs is a useful method for cannabis retailers to combat ongoing price compression.


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