Marketing Blueprint - the Decoy effect

The Decoy Effect: How an Extra Choice Boosts Sales

Do you struggle to get customers to choose your most premium offer? You’re not alone! But what if I told you that adding one extra option could change everything?

What Is the Decoy Effect?

First introduced in 1982 by Joel Huber from Duke University, the Decoy Effect is a psychological pricing strategy that influences consumer choices by adding a third option—a decoy—that makes the premium offer look like a better deal.

How It Works

Imagine you sell coffee:

☕ Small – $2

☕☕ Premium – $8

Most people will go for the $2 option because $8 feels too expensive. But now, add a decoy:

☕ Small – $2

☕☕ Medium – $6 (decoy)

☕☕☕ Premium – $8

Suddenly, the $8 coffee feels like the best value! The $6 option exists only to make the $8 choice look more attractive. This trick works because our brains naturally compare relative value rather than making purely logical decisions.

Why It Matters for Marketers

The Decoy Effect is everywhere—from SaaS pricing to movie theater popcorn. By strategically placing a middle-tier option, you can subtly guide customers toward your preferred choice.

Stay tuned for the next concept on Marketing Blueprint!

Julien Rio.