Skip to main content

Designing Price Tiers: Using Decoys to Nudge Buyers

 Designing Price Tiers: Using Decoys to Nudge Buyers

Yesterday we mastered chunking to make content more digestible. Today, we’ll explore the Decoy Effect—a pricing strategy that adds a “decoy” option so your preferred choice looks like the best deal.

When it comes to digital marketing and online sales, one of the most powerful psychological tactics you can employ is the decoy effect. This psychological principle can dramatically influence how customers perceive value and make purchasing decisions. By strategically designing price tiers and adding a decoy option, you can nudge your customers toward the highest-value product or service.

At VRND, we specialize in creating pricing strategies that incorporate decoy pricing to optimize customer behavior and drive higher conversion rates. In this blog, we’ll dive into the decoy effect, explore how it works, and show you how to use it to structure your pricing tiers in a way that maximizes revenue.

Want to learn how decoy pricing can drive sales? See how VRND help you to discover pricing strategies for better results.

 Implement it, and you’ll steer prospects toward higher-value purchases with minimal effort.

What Is the Decoy Effect?

The Decoy Effect occurs when you present three options—A, B (the decoy), and C—so that one (“C”) becomes more attractive when compared to the decoy (“B”), even if “C” wasn’t initially the obvious choice.

  • Option A: Basic plan

  • Option B (Decoy): Nearly the same as A but slightly more expensive

  • Option C: Premium plan with clear extra value

Decoy Effect

Using Decoys to Nudge Buyers


Example of the Decoy Effect in Action:

Imagine a movie streaming service offering two subscription plans:

  • Plan A: $10 per month

  • Plan B: $15 per month

Now, introduce a third option:

  • Plan C (decoy): $14.99 per month with fewer features than Plan B.

Even though Plan C isn’t the best value, it makes Plan B seem like a better deal because Plan C is so similar to Plan B, but with slightly fewer features. The presence of the decoy nudge customers to perceive Plan B as a better value, leading to increased sales for the higher-tier plan.

Why It Works

  • Comparative Anchoring: The decoy anchors expectations, making your target option (C) look like a bargain.

  • Simplifies Decision­making: Prospects quickly dismiss the decoy and choose between two clear winners (A vs. C).

  • Perceived Value Boost: By comparison, the premium appears to deliver far more extra benefits for a small extra cost.

Real-World Examples

  1. Magazines: $59 for digital only, $125 for print + digital, and a $125 “decoy” print-only option drives more people to choose the bundled deal.

  2. Popcorn Sizes: Small $3, Medium $6.50, Large $7 (decoy makes Large seem like better per-ounce value).

  3. SaaS Pricing: Basic $20, Pro $50, and a $50 decoy “Pro without support” option nudges users toward full Pro.

How to Design Effective Price Tiers with Decoys

When designing price tiers, it’s important to carefully think about how each option is perceived. Here’s how to effectively design pricing tiers using the decoy effect:

a. Choose Three Pricing Options

Offering three pricing tiers is a widely used pricing model. Three options give customers enough choices to compare and choose from, but not too many that they become overwhelmed. Ideally, these three options should include:

  • A low-priced entry-level option

  • A mid-tier option (most likely the decoy)

  • A premium option (the highest-priced option)

b. Place the Decoy in the Middle

The mid-tier option often serves as the decoy. Its purpose is to make the higher-priced plan seem like a better deal in comparison. Be sure that the decoy offers only slightly fewer features than the more expensive plan, but at a price point that makes the more expensive option feel like the best choice.

c. Add a Comparative Advantage to the Decoy

Your decoy option should offer a comparable value to the other options but should be slightly worse. This will help make the higher-tier plans look more attractive by comparison. For instance, the decoy may have fewer features or limited usage that make it less appealing than the other two options.

d. Set the Right Pricing Gaps

The price gap between your options should be significant enough to make the higher-tier option seem like it’s worth the extra cost. If the gap is too small, the decoy won’t effectively nudge customers upward. If the gap is too large, customers may feel the more expensive option is too out of their budget.

Common Pitfalls and How to Avoid Them

While the decoy effect is a powerful tool, there are some common mistakes businesses make when using decoys:

  • Overpricing the Decoy: If the decoy is priced too close to the premium option, it can confuse customers rather than guide them to the higher-priced plan.

  • Poorly Designed Decoys: If the decoy doesn’t offer comparable features or is too unattractive, it will fail to nudge customers toward the premium option.

  • Not Testing: Make sure to A/B test your pricing tiers to see which combinations work best for your audience.


 Ready to implement decoy pricing in your business? Contact VRND to design pricing strategies that maximize your profits and guide customers toward the right decisions.

Next Up : Commitment & Consistency

Next we’ll dive into how small “yeses” build big commitments—turn tiny wins into long-term conversions. Stay tuned!

Comments

Post a Comment

Popular posts from this blog

How Social Proof Drives Customers’ Decisions

How Social Proof Drives Customers’ Decisions In today’s crowded marketplace, convincing potential customers to choose your product or service can feel like an uphill battle. One of the most powerful psychological levers you can pull is social proof —the tendency for people to mirror the actions of others when making decisions. From Amazon star ratings to crowded restaurant patios, social proof quietly nudges prospects toward trust, and ultimately, conversion. What Is Social Proof? Social proof is a psychological phenomenon whereby people assume the actions of others reflect correct behavior for a given situation. In marketing, it manifests as: User Reviews & Ratings: Stars, testimonials, and written feedback Usage Metrics: “Over 10,000 customers served” or “500,000 app downloads” Endorsements: Influencer shout-outs, expert quotes, celebrity sponsorships Social Shares: Number of likes, comments, and shares on social media When prospects see that others have had...
Post a Comment
Read more

Anchoring in Pricing: How First Impressions Shape Value

Anchoring in Pricing: How First Impressions Shape Value Yesterday we uncovered reciprocity —how giving a little free value primes prospects to give back. Today, we turn to anchoring , a subtle but powerful pricing tactic. By presenting an initial “anchor” number, you steer customer expectations and make subsequent offers seem more (or less) attractive. Want to learn more about how we use psychological principles like anchoring to drive conversions? At VRND, we specialize in leveraging marketing psychology to optimize your business's results. Discover how VRND can transform your marketing today. What Is Anchoring? Anchoring is a cognitive bias where people rely heavily on the first piece of information offered (the “anchor”) when making decisions. In pricing: First price seen sets your perception of value. All other prices are judged relative to that anchor. Why It Works Reference Point Your brain uses the anchor as a baseline: everything else feels better or ...
Post a Comment
Read more

Building Authority: How Expert Cues Boost Your Credibility

Building Authority: How Expert Cues Boost Your Credibility In marketing, authority is your shortcut to trust. When prospects see expert badges, credentials, or endorsements, they feel safer buying from you. Today’s post shows you why authority works , real-world examples , and 4 simple tactics to establish yourself as the go-to expert—so you can climb the search rankings and convert more visitors. What Is Authority in Marketing? Authority bias is our tendency to trust and follow experts. In digital marketing, authority signals include: Certifications (e.g., Google Partner badge) Press mentions (“Featured in Forbes”) Expert endorsements (testimonials from respected figures) Professional designations (e.g., “PhD,” “MBA,” “CMA”) Want your audience to trust you instantly? The key lies in authority bias —the psychological tendency to trust experts and authoritative figures. At VRND , we specialize in using psychology-driven strategies to optimize your marketing an...
Post a Comment
Read more