How To Use Decoy Pricing To Increase Revenue…

Decoy Pricing is a valuable pricing and monetization tool that is massively underused.

Here are 3 reasons why it works:

1/ Your customer is not always going to act rationally. They're humans, not economic models!

2/ Your customer lives in a world of information overload. Coherent pricing helps reduce this.

3/ Your customer has in-built heuristics and mental shortcuts that default towards ease of decision making.

[[There's a detailed breakdown of the psychological theory here if you want to go further down the rabbit hole.]]

…The graphic above shows why these 3 reasons combine into a powerful revenue machine.

Let’s breakdown why:
a] the 3 choices make it easy for customer to assess prices – as there’s only 3 balls to juggle.

b] the choices make a clear separation - those under $100 and those above.

c] a premium customer [i.e. all those that don’y consider themselves as budget] now has a straight choice between the premium series 9 or top end series 12.

Now this is where it get’s interesting…

d] do I choose series 9 or series 12? The key question we will all ask is can I justify the difference between series 9 and series 12? The decoy comes alive!

e] series 12 is higher than series 9 - trivial in theory, but would you rather buy an iphone 9 or iphone 12? In our minds we assume that the next generation product is always better than the previous - rightly or wrongly!

f] sticking with the iphone analogy - would you expect to pay more for an iphone 12 than 9 - yeah!

g] check out the wattage – series 12 has 1200 watts and series 9 only 1000 watts. You and I know that unless you’re a professional cocktail maker of trying to blend a remote control the extra 200 watts is irrelevant but !!!

h] and what’s with the serial number. N12-1207 just feels better than N10-0907DG. Why. We don’t know we just feel it in our gut. N12-1207 flows and seems better than the complicated N10-0907DG which seems of inferior quality.

Remember, we’re not rational Econs, we’re Humans! And last but not least…

i] a 12 piece set is naturally more exciting than a 9 piece set. This is also shown as visibly more interesting in the pic. Series 12 just comes with a bunch more stuff – and we love more stuff!

There you have it - NutriBullet delivers a masterclass in decoy pricing - and yes, before you ask, I have the series 12 and all the accoutrements clogging up my kitchen work counter as we speak!

That's all folks.

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Monetization & Out — Gary