Definition of Decoy Pricing
This pricing strategy, as the name implies, forces a consumer decision. When they are in the midst of buying an item, they have to decide to make a selection from various prices as well as features.
Description of Decoy Pricing
For instance, suppose a buyer has to make a choice between a couple of selections. Their choice lies in the smaller item that costs less or the larger one that costs more. They’d most likely choose the least expensive one. However, with the decoy effect, a third alternative is present. This item is priced quite close to the most expensive one to make the more expensive one seem like it’s the smartest selection of them all. Therefore, the consumers decision was altered to select the more expensive one since the middle price of the two was closest to the highest priced item.
Advantages of Decoy Pricing
With the help of this pricing strategy, you can get consumers to purchase the item that you’d personally like to sell by pricing items in a way to get them to choose the deal that they think is best. Here, you get them to look for the best value instead of the best bargain.
Disadvantages of Decoy Pricing
With an increase in the number or choices to make, a consumer’s response may either become delayed, or they may not even end up making the decision to make a purchase altogether.