In his book Predictably Irrational, Dan Ariely explains that people tend to behave irrationally in a predictable fashion.
To illustrate his theory, he conducted a study on the Economist's pricing plan.
Economist.com had 2 subscriptions options:
68% bought the Web only option and only 32% bought the Print + Web version.
Then he tried something new with their pricing. He added a new reference point, “Print only” for the same price as “Print + Web”.
When presented with all three options, 16% bought the Web only version while 84% bought the Print + Web subscription.
The Print + Web sales increased by a significant 262%!
Why? Because the customers were no longer comparing the $59 Web only plan with the $125 Print + Web plan. Rather they were now weighing the Print only subscription plan at $125 against the Print + Web subscription plan at $125.
How you can use it: Add a decoy plan to your pricing next to the plan you really want customers to take.
In his book Predictably Irrational, Dan Ariely explains that people tend to behave irrationally in a predictable fashion.
To illustrate his theory, he conducted a study on the Economist's pricing plan.
Economist.com had 2 subscriptions options:
68% bought the Web only option and only 32% bought the Print + Web version.
Then he tried something new with their pricing. He added a new reference point, “Print only” for the same price as “Print + Web”.
When presented with all three options, 16% bought the Web only version while 84% bought the Print + Web subscription.
The Print + Web sales increased by a significant 262%!
Why? Because the customers were no longer comparing the $59 Web only plan with the $125 Print + Web plan. Rather they were now weighing the Print only subscription plan at $125 against the Print + Web subscription plan at $125.
How you can use it: Add a decoy plan to your pricing next to the plan you really want customers to take.
