Why Decoys Beat True Value

Quick Insight

Your metrics are not your strategy. Decoy options lead people to pick certain options, like the middle option in a list of three options. We love discounts, and sellers have incentives to manufacture the illusion of deep discounts and great deals. Look at how you present your products to buyers. Are you leading them to the product that provides the best value to you and the customer? 


We love to compare a price to another price (e.g., a suggested retail price) instead of the true value of the product to us. We love discounts, and sellers have incentives to manufacture the illusion of deep discounts and great deals. 

Decoy options lead people to pick certain options, like the middle option in a list of three options. What are decoy options? 

Let's start with a behavioral observation. When people are given three sets of options, they tend to pick the middle price option.

Maybe the seller is truly offering three options from which they have no preference which you pick. On the other hand, the cheap and the high price options are often decoys to funnel us to the middle option. They are really selling the middle option, and we're unconsciously funneled to it as a good deal by reference to the other prices. Once again, price is often compared to other prices, not a cost-benefit analysis of our needs.

Here's a similar example: A restaurant consultant said high-priced menu items increased revenue by causing more people to buy the second-most expensive item. The high price item may have been placed on the menu as a decoy or a funnel.

Look at how you present your products to buyers. Are you leading them to the product that provides the best value to you and the customer? People have a hard time judging value, so how you present a product can help lead them to that value.

I wish value for you and your customers. I wish you well.


- Rob Stephens


Further Insight


CFO Perspective Resources

  • Video: Pricing Strategies for More Profit and Customer Engagement - You’re fulfilling your customers’ dreams. Your customers are delighted with their experience with you. Can you charge for this? Customers are willing to give you their valuable dollars when you give them value. How do your customers know whether your prices are a good deal for the value they are receiving?
  • Course: Behavioral Finance - You can avoid costly financial decision-making mistakes. Overcome your destructive financial impulses by understanding common thinking mistakes. This course will help you to learn science-backed ideas to make better financial decisions. 

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