Price isn’t just a number—it’s a narrative. From Delta to Dyson to Nespresso, smart brands use the decoy effect to shift perception, anchor value and make mid-tier feel like a masterstroke. This piece unpacks the psychology, ethics and strategy behind one of marketing’s most quietly powerful tools.

I wasn’t planning to spend too much. I just needed a roundtrip airline ticket from Boston to San Juan. It’s just a four-hour daytime flight. No need to fly fancy. The options popped up on my screen: Main Basic at $323, Main Classic at $393, Comfort Classic at $493 and First Classic for $873.
That $323 Basic fare? A punishment masquerading as a bargain (by today’s inflated standards). No seat choice. No changes. No upgrades. And baggage…are you joking? Main Classic at $393 suddenly felt like a life preserver. For $70 more, you get sanity: a seat, a bag, a modicum of dignity.
But here’s where it got clever. Once I’d mentally committed to $393, the $493 Comfort Classic fare—just a hundred bucks more—started whispering promises: extra legroom, early boarding, an air of superiority. And just like that, Delta nudged me up the ladder without ever pushing. Well, maybe a little shove. I mean, I no longer book airline tickets without expecting to get screwed. But at least I got to choose how I was going to get screwed. And where I would be sitting while I was getting screwed.

That’s the decoy effect.

And it’s not just for airline tickets. It’s one of the most quietly powerful levers in marketing psychology—and it’s everywhere.

There is a classic principle in behavioral economics known as the asymmetric dominance effect. But in the marketing world, it’s better known by its sharper alias: the decoy effect.

The term was popularized in the 1980s by a group of behavioral researchers who showed that when a third, inferior option is added to a choice set, it can predictably shift consumer preference toward the option it’s meant to make look better. It’s not about offering more choice—it’s about shaping the choice architecture itself.

This third option—the decoy—isn’t supposed to win. It’s designed to make one or both of the other two options (usually the more profitable one) feel smarter, safer or more valuable by comparison. It might be more expensive but stripped of features, or cheaper but inconvenient. Either way, it’s the psychological scaffolding propping up your real target.

It’s also not always about upselling. It’s about anchoring expectations, reframing what counts as “value,” and nudging consumers toward the option you actually want them to pick.

The Loser Option

In the UK, Pret A Manger offers a £25/month coffee subscription to its caffeine-addicted loyalists—up to 5 drinks a day, no questions asked. But in certain trial markets, they quietly rolled out a £20 version that gives you only 3 drinks. The result? Nobody bites. The £20 plan isn’t there to compete—it’s there to lose. That’s the point. It’s a soft decoy that makes the £25 option feel like a steal without ever changing the offer itself.

A recent global survey by Growth Method in 2025 found that over 70% of consumers rely on relative comparison when evaluating product value, rather than assessing absolute price.

Making the Middle Feel Like Luxury

Uniqlo isn’t known for upselling, but even minimalists play the decoy game. Take their denim wall: you’ll find the €24.90 basic slim fit jeans—no stretch, basic washes, limited sizing—neatly stacked beside the €49.90 “Ultra Stretch” or “Selvedge” lines. The entry pair isn’t there to sell—it’s there to anchor. Once you feel the cardboard-stiff basics, the mid-tier jeans feel like Japanese-engineered comfort for just a little more.

You Don’t Need a Perfect Ladder

Nespresso mainly sells pods in sleeves of 10, 30 and 50 worldwide, and introduces seasonal or limited-edition bundles to create perception contrast and anchor higher-value choices among its core range. This approach leverages consumer reference points—highlighting premium capsules next to standard variants—which encourages buyers to select what feels like the smartest, most balanced deal.Marketing case studies show that the decoy effect works especially well in physical products and FMCG, with clear pricing contrasts guiding customers toward value-aligned mid-tier purchases—a strategy consistently used by brands like Nespresso and major retailers in 2025

Retail Theater: Stage Your Decoys

Sometimes the decoy is the most expensive.  At Dyson’s flagship in Tokyo, three vacuum models are theatrically lit like they’re about to give a TED Talk. The most expensive one—rarely purchased—sits dead center under a spotlight, while the more popular mid-tier models lurk on either side of it. The decoy is doing its job without ever leaving the shelf. It doesn’t need to move units—it needs to move minds.

Retailers globally use the decoy effect with physical staging—strategically placed decoy products in flagship stores guide consumer choices toward the desired models, as seen in electronics and FMCG sectors.

Subscription Psychology: The Middle-Tier Mirage

The New York Times sells three types of access: Digital for $4 a week, Cooking + Games for $5, and All Access for $6. The middle tier doesn’t get much love, but it’s not supposed to. It’s the decoy that makes All Access look like a no-brainer. Just a dollar more? Of course I’ll take everything.

In a famous test with The Economist’s subscription plans, nearly 84% of consumers selected the top tier when a closely priced decoy was added, compared to just 32% without it.

Prestige Pricing as Halo Generator

Lavazza’s “Tierra!” organic line isn’t just about ethical sourcing—it’s a high-margin beacon. At €7 per pack, it’s more than most Italians spend on coffee. But they don’t have to. The presence of Tierra! elevates everything else. Standard blends start to feel affordable, premium, even righteous by association.

A recent diamond retailer case study showed sales conversions for high-value products increased up to 3.2x due to well-placed decoy alternatives, with overall gross profit rising 14.3%.

Local Price Psychology: It’s All in the Name

Apple doesn’t just sell iPhones. It sells the iPhone 15, 15 Plus, 15 Pro and 15 Pro Max. Now it’s adding iPhone “Air” to the mix. They’ve tried bigger, smaller and now thinner—for the wild card slot (Hey, it worked for their laptops!). “Plus” sounds generous, “Pro” sounds elite, “Pro Max” sounds like your phone has a corporate card. “Air” whispers minimalist cool even before you see the spec sheet. The features shift slightly—sometimes barely—but the names do the heavy lifting. 

Most buyers confirm Apple’s strategy and state that model names shaped their perception of value more than tech specs. When every pixel counts and price gaps widen fast, naming isn’t just branding—it’s behavioral design.

Misdirection: The “Look Over There” Strategy 

Back in university, I had a side gig selling family photo packages in department stores. Our job wasn’t just to pitch portraits. It was to close on the spot. We didn’t ask, “Do you want it?” We skipped straight to, “Will that be cash, check or charge?”

That wasn’t just a hard sell. It was a perceptual redirect. By asking how they wanted to pay, we shifted the customer’s mental frame away from whether they wanted to buy and toward how they’d complete the purchase. It worked far more often than it should have.

This is the same behavioral sleight-of-hand behind many modern decoy strategies. The power isn’t just in the price—it’s in the framing. The decoy reframes your decision from “Is this worth it?” to “Which one should I get?” Once you’re asking that question, you’re already in the checkout aisle.

Neuroscientists call this attentional narrowing—when a brain under cognitive load focuses more on comparing available options than stepping back to question the premise. In pricing, that’s gold.

Of course, when done with transparency, this isn’t manipulation. It’s designing decisions to feel intuitive. But the line between the two is thin—and how you cross it determines whether your customer feels smart or suckered.

Retail Theater: Stage Your Decoys
Sometimes the decoy is the most expensive. At Dyson’s flagship in Tokyo, three vacuum models are theatrically lit like they’re about to give a TED Talk. The most expensive one—rarely purchased—sits dead center under a spotlight, while the more popular mid-tier models lurk on either side of it. The decoy is doing its job without ever leaving the shelf. It doesn’t need to move units—it needs to move minds.
Retailers globally use the decoy effect with physical staging—strategically placed decoy products in flagship stores guide consumer choices toward the desired models, as seen in electronics and FMCG sectors.

Subscription Psychology: The Middle-Tier Mirage

The New York Times sells three types of access: Digital for $4 a week, Cooking + Games for $5, and All Access for $6. The middle tier doesn’t get much love, but it’s not supposed to. It’s the decoy that makes All Access look like a no-brainer. Just a dollar more? Of course I’ll take everything.

In a famous test with The Economist’s subscription plans, nearly 84% of consumers selected the top tier when a closely priced decoy was added, compared to just 32% without it.

Prestige Pricing as Halo Generator

Lavazza’s “Tierra!” organic line isn’t just about ethical sourcing—it’s a high-margin beacon. At €7 per pack, it’s more than most Italians spend on coffee. But they don’t have to. The presence of Tierra! elevates everything else. Standard blends start to feel affordable, premium, even righteous by association.

A recent diamond retailer case study showed sales conversions for high-value products increased up to 3.2x due to well-placed decoy alternatives, with overall gross profit rising 14.3%.

Local Price Psychology: It’s All in the Name

Apple doesn’t just sell iPhones. It sells the iPhone 15, 15 Plus, 15 Pro and 15 Pro Max. Now it’s adding iPhone “Air” to the mix. They’ve tried bigger, smaller and now thinner—for the wild card slot (Hey, it worked for their laptops!). “Plus” sounds generous, “Pro” sounds elite, “Pro Max” sounds like your phone has a corporate card. “Air” whispers minimalist cool even before you see the spec sheet. The features shift slightly—sometimes barely—but the names do the heavy lifting. 

Most buyers confirm Apple’s strategy and state that model names shaped their perception of value more than tech specs. When every pixel counts and price gaps widen fast, naming isn’t just branding—it’s behavioral design.

Misdirection: The “Look Over There” Strategy 

Back in university, I had a side gig selling family photo packages in department stores. Our job wasn’t just to pitch portraits. It was to close on the spot. We didn’t ask, “Do you want it?” We skipped straight to, “Will that be cash, check or charge?”

That wasn’t just a hard sell. It was a perceptual redirect. By asking how they wanted to pay, we shifted the customer’s mental frame away from whether they wanted to buy and toward how they’d complete the purchase. It worked far more often than it should have.

This is the same behavioral sleight-of-hand behind many modern decoy strategies. The power isn’t just in the price—it’s in the framing. The decoy reframes your decision from “Is this worth it?” to “Which one should I get?” Once you’re asking that question, you’re already in the checkout aisle.

Neuroscientists call this attentional narrowing—when a brain under cognitive load focuses more on comparing available options than stepping back to question the premise. In pricing, that’s gold.

Of course, when done with transparency, this isn’t manipulation. It’s designing decisions to feel intuitive. But the line between the two is thin—and how you cross it determines whether your customer feels smart or suckered.

When Decoys Backfire

BMW tried to charge South Korean drivers a monthly subscription for heated seats. Yes, seats that were already installed in the car. The logic? Make higher-trim packages seem like the better buy. The backlash was instant. Nobody likes the feeling of being charged rent on their own furniture. It wasn’t just tone-deaf—it made consumers question the brand’s integrity.

Recent industry surveys show that clear and transparent pricing structures are among the top factors increasing consumer trust and loyalty in brands across global markets.

Ethics, Transparency and the Marketing Line

The difference between marketing and manipulation isn’t the trick—it’s the tell. The best decoy strategy doesn’t con the customer. It collaborates with them. It assumes they’re sharp, not sheep.

Consumers aren’t naïve. They know there’s psychology behind pricing. They’re fine with that. In fact, they often appreciate it. The resentment only kicks in when the logic is hidden or the tradeoffs feel like traps. That’s when clever becomes cynical.

Want to build trust? Treat pricing like UX. Label the tiers plainly. Don’t bury fees in footnotes. If your cheapest plan is restrictive, say so. If your top-tier is worth the premium, prove it. People don’t mind nudges when they know where the hands are.

Marketing psychologists consistently find that transparent pricing and clear communication strongly correlate with higher customer loyalty and perceived brand trustworthiness in both B2C and B2B environments.

In a world where algorithmic pricing, drip fees and subscription fatigue are all eroding confidence, transparency is a competitive advantage. Done right, your decoy doesn’t just guide the choice—it reinforces the relationship. Because when people feel in on the game, they’re far more likely to keep playing.
Final Takeaway
The decoy effect isn’t a hack. It’s a scaffold. Smart marketers don’t push. They build structures that make one option feel obvious, framing decisions so customers feel clever for saying yes.
You’re not choosing what people pay. You’re shaping what feels worth paying for.

Sources: Growth Method, Lead Alchemists, Shopify Enterprise, Cognitive Clicks, 7Boats, Julien Rio Marketing