How To Use Decoy Pricing

It’s possible to subtly influence your target audience in such a way that their perception of ‘the right decision’ can be altered.

A classic example of this is the use of ‘decoy pricing’.

Several years ago a Professor in Psychology and Behavioural Economy,  Dan Ariely, studied subscription options offered by The Economist.

OptionA – Print+Digital for $125 

Option B – Digital Only for $59

Prof Ariely asked 100 of his students to choose their preferred subscription, and the results were as follows:

32 students selected Option A

68 students selected Option B

Total ‘revenue’ = $8,012

Prof Ariely then introduced a dummy option”

Option a – Print Only for $125

So the student options were now:

Option a – Print Only for $125

OptionA – Print+Digital for $125 

Option B – Digital Only for $59

The choice made by his students was nothing short of astounding…

Option a- Print Only 0 students @ $125 = 0

Option A – Print+Digital 84 students @$125 = $10,500

Option B – Digital only 16 students @ $59 = $944

Total ‘revenue’ = $11,444

This represents an uplift of $3,432 (42%) in total revenue!!

HOW TO USE

Add a decoy pricing option next to your preferred pricing option.

As an example let’s say you have two product options: 

Option A is a video course on Facebook advertising

Option B is a video course on Facebook advertising plus a ‘toolkit’ of workbook, ebook, audiobook and sample ads.

Option A costs $67

Option B costs $97

You want your target audience to choose Option B.

At the moment your target audience has a choice to make that is not really influenced by you. They may choose Option B if they feel that the ‘toolkit’ would be useful, or they may just go for Option B as it is a lower price.

Now, introduce a ‘Decoy’ option, let’s call it ‘Option b’ into the mix and you can swing the probabilities in your direction.

Option A: video course on Facebook advertising – $67

Option b: video course on Facebook advertising plus workbook – $91

Option B: video course on Facebook advertising plus a ‘toolkit’ of workbook, ebook, audiobook and sample ads – $97

By introducing a third option that is very close in price to your preferred option, but far inferior in terms of value, you trigger a reaction in your target that pushes them to take the best value option, Option B in this case.

Watch Prof Ariely talk about it in his TED talk https://youtu.be/9X68dm92HVI

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Andy Wood

Andy Wood

My mission is to guide and empower you with the tools, resources, strategies, and tactics to help you succeed in your online business, and (of course) EXPLODE your income so you can live life on your own terms.

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