Some prices just seem like a better deal, so you end up buying even when you weren’t planning to.
How you were influenced is probably not by accident, and you probably fall for the pricing psychology behind it more often than you think.
Two clever strategies behind this psychology are what are known as the decoy effect and zero pricing.
Many businesses use the decoy effect to steer your choices. The idea is simple: offer three options, but promote one as a no-brainer. For example, the price at a café shows a small coffee for $6, a medium at $7.20 and a large for $7.50. What coffee are you steered towards?
The medium coffee is not really there to sell. It’s a decoy. Its job is to make the large look like a bargain: “Only 30c more for the big one? Why not!” Suddenly, you’re upsizing, and the café is making more profit, all without pushing you. It’s your decision after all.
Zero pricing is a little different, because everyone likes something for nothing – “free” is the irresistible word. Offer something at no added cost, or highlight something free, and people pay attention.
Think of streaming services with free tiers, or cafés offering a free coffee with a scone. The offer might not be their main product, but it gets people in the door. And once you’re in? Maybe you grab a muffin, upgrade and upsize, or just keep coming back.
Both the decoy effect and zero pricing work because they play on how we feel about value, not just what we see on the price tag.
