Have you ever noticed how often products come in three size options – small, medium and large? While it may be partially because businesses want to offer different options to customers, the real reason might be because it’s healthy for the bottom line. Smart marketers take advantage of the decoy effect to lead customers to a bigger purchase than they may ordinarily make.
The decoy effect is when you offer three options instead of two, and price the middle option closer to the most expensive one, which makes the customer more likely to buy the most expensive option. In other words, the middle option is a decoy that is there to make the most expensive option appear like a better deal. People feel like they are getting better value for their money because they only paying a little more for the most expensive option, in comparison to the middle (decoy) alternative.
As the video from Brain Games shows, it can make a big difference in shifting customers from buying the least expensive option to the most pricey one. So whenever you’re pricing for something that can come in different volumes, or perhaps packages/combos, make sure that you’re using the decoy effect to your advantage for some easy upselling.