Unit Economics

Decoy Pricing

See how adding a deliberately worse option can make the choice you want look irresistible, and lift revenue without changing a price.

  • Intermediate
  • 6 min total
  • 11 chapters

What decision this helps you make: How to structure your pricing options so customers happily choose the more profitable one.

What this topic is

The decoy effect is adding a third option, clearly worse than one choice but not the other, to steer customers toward a targeted and usually more profitable option. The decoy isn't meant to sell. It exists to reshape the comparison.

Why it matters

It shows that customers don't judge options in isolation. They compare. By controlling what each option is compared against, you can shift which one they choose and lift revenue without changing any price.

Who should learn it

Anyone who offers tiers, sizes, or plans, where the number and framing of options can matter as much as the prices themselves.

What you will understand

  • See how a "worse" option makes another look obviously good
  • Recognize decoys in the pricing menus you see every day
  • Structure tiers so the profitable option wins on its own merits
  • Use the effect honestly, and spot when it's manipulation

Prerequisites

Common misconception

"A pricing option nobody chooses is a wasted option." A decoy that gets zero sales can still be the most valuable option on the menu. Its entire job is to make a more profitable choice look like the obvious one.