The Decoy Pricing Playbook
How a third option makes your real offer irresistible.
What is decoy pricing?
Decoy pricing introduces a deliberately unattractive option to shift perception. When customers compare three tiers instead of two, the middle option becomes the obvious choice — even if nothing about it changed.
The classic experiment
Dan Ariely's Economist subscription test is the canonical example. Offering web-only at $59 and print+web at $125 produced a 68/32 split. Adding a print-only decoy at $125 flipped the result: 84% chose print+web. The decoy made the bundle feel like a steal.
Three rules for the decoy
- Inferior on one dimension. The decoy must be clearly worse than the target on at least one axis.
- Similar price. Price the decoy close to the target so the target looks like a bargain.
- Never the cheapest. The decoy should not compete with your entry-level offer.
Applying it to SaaS
For a tool like Meridian, a decoy tier might offer fewer features than the Pro plan at only a slightly lower price. Customers see the gap and upgrade. The decoy never needs to sell — it only needs to exist.
Meridian uses transparent, value-aligned pricing. This article explores the psychology behind decoy effects — not our current strategy.