Part 6 · Pricing and Value Perception

Decoy Effect

An additional alternative can change the relative appeal of an existing option. The decoy effect highlights why the whole comparison set matters, even when the target product’s own price and features have not changed.

Decoy Effect · Illustrated by Hendra Saputra with AI assistanceSelect the illustration to explore it at a larger size.

The idea

An asymmetrically weaker alternative can influence the appeal of a target when customers compare relevant dimensions, but a middle-priced plan is not automatically a true decoy. The illustration adds a hypothetical comparison plan to unchanged lower and higher choices, exploring whether a modest extra payment makes the larger allowance seem attractive; these figures are not real offers and do not by themselves establish strict dominance or predict behavior. Use the example as a conditional test of the comparison set, checking comprehension, suitability and actual responses instead of assuming that movement toward the target demonstrates a better customer decision.

Use it thoughtfully

  • Keep existing options unchanged in comparisons.
  • Check dominance and arithmetic on relevant dimensions.
  • Test whether the added choice helps informed decisions.

An example

In an illustrative catalogue, a customer compares a basic plan with a larger plan before seeing an intermediate alternative. The team keeps validity and terms consistent and asks whether the additional option clarifies value or merely creates a misleading comparison that encourages unnecessary spending.

A question to try

Does the comparison help customers choose what fits, or make one option attractive through an artificial distraction?

A useful framework is a starting point, not a guarantee. Effects vary with the audience, product and situation. Use truthful evidence, respect customer choice, and test the result.

Connect the ideas

Illustration

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