What is decoy pricing?
Decoy pricing adds an option you don't expect to sell, priced so another option looks like the clear deal. The decoy usually costs about the same as that option but gives less. Shoppers may then compare those two and skip the cheapest. Researchers call this the decoy effect, or asymmetric dominance.
How does the decoy effect work?
The decoy only has to lose to the option you want to sell, not to the cheapest one. A 1982 study in the Journal of Consumer Research found that adding a decoy can raise the chance people pick the option that beats it.
Decoy pricing examples
Say you sell a beanie at $20 and a scarf at $35, then add the pair as a set at $35. The scarf alone is now the decoy: the same $35 buys both. Beanie shoppers may weigh the set instead. But scarf buyers get the beanie free, so check the set still makes money.
A Shopify guide uses quantity tiers: 100 notebooks for $400, 250 for $875 and 300 for $900. The 250 tier is the decoy, since $25 more buys 50 more at $3.00 each instead of $3.50.
Economics Help calls a price set deliberately high a premium decoy, like a $400 coat that makes the $180 one look sensible. Prestige pricing is the reverse: the expensive item is meant to sell.
Does decoy pricing work?
Sometimes. A 2014 study in the Journal of Marketing Research found 11 reliable effects in 91 attempts across 23 kinds of product. Options shown as pictures or words, not numbers, cut the effect to chance. A second 2014 study found that it does not usually appear once people try the product or see even one difference in a photo. The 1982 authors replied that it holds when a study is closely repeated.
Your best odds are options that differ only in numbers, like the notebooks. Test a decoy before you keep it.
Is decoy pricing ethical?
It can be, if you would sell every option at its price, like the $35 scarf. That Shopify guide calls three things questionable: fake options built to look bad, differences hidden in small print and made-up discounts.
Quantity tiers you can A/B test, with Sledge
In Sledge Volume Discounts, each quantity tier gets its own title and badge and can show its price per item. "Selected by default", the tier already picked when the page opens, sets where shoppers start. You can A/B test two versions of an offer and compare their sales. On a paid plan, Growth Intelligence totals the fixes it suggests as one sales estimate in your store's currency, labeled "Est. potential".
