What is Decoy Pricing in Retail? Explained

Decoy pricing is a pricing strategy employed in retail where a product with a higher price is intentionally placed alongside similar but slightly cheaper options to influence consumer choices. The goal is to make the higher-priced option (the decoy) appear more attractive or justifiable by comparison, leading customers to perceive it as offering better value for money. This strategy nudges consumers toward the desired purchasing decision and can enhance overall revenue by steering customers toward higher-margin products. Decoy pricing is a subtle yet effective psychological tactic widely used in retail to influence consumer behavior and purchasing patterns.