What is the decoy effect in pricing?

Decoy effect (эффект приманки) in pricing is a behavioral phenomenon where adding a third product option (decoy) influences the choice between two main options.

Example:

• There are two subscription options: basic for $10 and premium for $20.
• A third option — "decoy" for $18 — is added, which is worse than the premium but more expensive than the basic.

Because of this, consumers are more likely to choose the premium, as it appears more advantageous compared to the decoy.

This effect is used to increase sales of more expensive or more profitable products for the company by influencing the perception of value.