The Power of the Decoy: How a Clever Option Can Drive Bigger Sales
Ever noticed that companies often include a ridiculously expensive product next to a mid-tier one? That’s the Decoy Effect, a subtle psychological pricing strategy that nudges customers toward the option you want them to choose without them realizing it.
What is the Decoy Effect?
The Decoy Effect occurs when introducing a third “decoy” option makes one of the other two choices more appealing. The decoy isn’t meant to sell; it’s meant to shift perception and influence behavior.
Mini Case Study: The Economist Subscription
One of the most famous examples comes from The Economist magazine:
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Option A: Online-only subscription – $59
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Option B: Print-only subscription – $125
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Option C: Print + Online subscription – $125
Most customers ignore Option B. Suddenly, Option C seems like a bargain; for the same price, they get both. Option A still sells to budget-conscious readers, but Option C becomes the winner.
Result: By adding the decoy, The Economist significantly increased the number of people choosing the higher-value subscription.
Why It Works
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Anchoring: The decoy makes the preferred option feel like a smart choice.
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Contrast: Customers compare options, and the decoy creates the contrast needed to highlight the value of the target choice.
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Ease of Decision: People love clear “best options.” The decoy makes it obvious.
How to Apply It in Business
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Identify your target product or service.
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Introduce a decoy: Slightly worse or more expensive than your ideal option.
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Highlight value: Let customers clearly see why the target choice is superior.
Example: A SaaS company might price tiers at:
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Starter: $20/mo
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Pro: $50/mo
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Pro+Premium: $55/mo
Most people naturally go for Pro, perceiving it as the best value.
The Takeaway:
The Decoy Effect is a simple, ethical, and effective way to guide customer behavior without forcing a sale. A carefully designed pricing structure can dramatically increase conversions.