Decoy Pricing

Optimize your pricing by including unattractive options
Decoy Pricing

In his book Predictably Irrational, Dan Ariely explains that people tend to behave irrationally in a predictable fashion.


To illustrate his theory, he conducted a study on the Economist's pricing plan.


Economist.com had 2 subscriptions options:

  • Web only version for $59
  • Print + Web versions for $125


68% bought the Web only option and only 32% bought the Print + Web version.


Then he tried something new with their pricing. He added a new reference point, “Print only” for the same price as “Print + Web”.

  • Web only: $59
  • Print only: $125
  • Print + Web: $125


When presented with all three options, 16% bought the Web only version while 84% bought the Print + Web subscription.


The Print + Web sales increased by a significant 262%!


Why? Because the customers were no longer comparing the $59 Web only plan with the $125 Print + Web plan. Rather they were now weighing the Print only subscription plan at $125 against the Print + Web subscription plan at $125.


How you can use it:  Add a decoy plan to your pricing next to the plan you really want customers to take.

In his book Predictably Irrational, Dan Ariely explains that people tend to behave irrationally in a predictable fashion.


To illustrate his theory, he conducted a study on the Economist's pricing plan.


Economist.com had 2 subscriptions options:

  • Web only version for $59
  • Print + Web versions for $125


68% bought the Web only option and only 32% bought the Print + Web version.


Then he tried something new with their pricing. He added a new reference point, “Print only” for the same price as “Print + Web”.

  • Web only: $59
  • Print only: $125
  • Print + Web: $125


When presented with all three options, 16% bought the Web only version while 84% bought the Print + Web subscription.


The Print + Web sales increased by a significant 262%!


Why? Because the customers were no longer comparing the $59 Web only plan with the $125 Print + Web plan. Rather they were now weighing the Print only subscription plan at $125 against the Print + Web subscription plan at $125.


How you can use it:  Add a decoy plan to your pricing next to the plan you really want customers to take.

Access this tactic and 120+ more by joining GrowthList.
Get full access
Shared by
Antoine Milkoff

Tools

No specific tool needed.

Tools

No specific tool needed.

Examples

No specific examples.

Examples

No specific examples.

Related tactics