I Have Three Tiers and Everyone Picks the Cheapest, the Decoy Effect (and Why I Won’t Build You One)

You built three pricing tiers, and nearly every customer picks the cheapest one instead of the plan you actually want them on. This episode starts where most decoy-effect advice does, reframing it as a choice-architecture problem, not a discounting one, and then does the thing most tellings skip: it gets the mechanism right and then refuses to sell it. Host Brian Kasday and operator Dave work through asymmetric dominance, demonstrated by Huber, Payne and Puto and popularized by Dan Ariely with the Economist subscription example. The common mislearning is that a decoy has to cost the same as your target, it doesn’t. What matters is that your target beats the decoy on the attributes buyers compare, while the competing option doesn’t, and price is only sometimes one of those attributes. Then the twist: to build a true decoy on Dave’s page, Brian would have to add a plan deliberately worse, one built only to lose to Growth, and Dave wins the ethical point cleanly. Deliberately adding an option designed to lose is just manufacturing a loser, and Brian stops wanting to rescue the tactic. The research is messier than the classroom version, too: the effect is real, but how reliably it transfers into real, messy buying environments is much less tidy, with some realistic and field studies finding weak or null effects. What survives is the true part: people judge options against what’s next to them, a good reason to inspect your pricing comparison before assuming price is the problem. The Monday Move: look at your real tiers on the attributes customers actually care about, check whether one genuinely dominates another, if not, you have tradeoffs, not a decoy, and make those tradeoffs easier to see instead of inventing a loser.

Written versionand this week’s Monday Move: The Operator’s Library at mmsvegas.com.

What is The 10-Minute Marketing Fix?

The greatest marketing ideas of all time, explained in ten minutes, with one thing you can do Monday morning.

Each episode takes one real business problem, pulls out the principle that actually solves it, and hands you the move. Brian Kasday and his co-host work an enduring marketing principle out of the seminar and into a business you would actually recognise. No hype, no jargon, nothing you need a whiteboard for.

Part of The Operator's Canon, from MMS Vegas and The Operator's Library at mmsvegas.com.