·
Why does every successful SaaS company have three pricing tiers? It isn’t for variety; it’s for direction.
What is the Decoy Effect?
The Decoy Effect occurs when consumers have a change in preference between two options when also presented with a third option that is "asymmetrically dominated."
The Classic Breakdown:
- Option A (The Target): £500/mo – Full Feature Set.
- Option B (The Competitor): £200/mo – Basic Features.
- Option C (The Decoy): £450/mo – Missing 50% of the features of Option A.
Option C is objectively "bad" compared to Option A. Its only job is to make the £500 option look like an incredible bargain.
How to Apply This in 2026
- Identify your "Target": Which service do you actually want to sell?
- Architect the Decoy: Create a version of that service that is only slightly cheaper but significantly less effective.
- Visual Saliency: Highlight the "Target" option with a "Most Popular" badge. This triggers Social Norming, telling the brain, "This is the safe choice."
