Decoy pricing is a marketing strategy where a business introduces a third pricing option (the "decoy") to make one of the other two options appear more attractive.
How It Works:
A higher-priced or less attractive option is added alongside two others.
The decoy influences customers to choose the most profitable option.
Example:
Option A: Small coffee - $2
Option B: Large coffee - $5
Decoy (Option C): Medium coffee - $4.50 Customers perceive the large coffee as a better deal and are more likely to choose it.