Check out National Geographic’s short explanation of the decoy effect

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5. Decoy Effect

The decoy effect or asymmetric dominance is another cognitive bias in decision making. When faced with a tough decision between two options, your perception of the price may change if a third option is added. The third option, called the decoy, is not what you really intend to sell. You are just trying to make the other option seem more reasonable and help the customer make a decision faster.


Here, with asymmetrical pricing, the $7 large size popcorn looks like a rip-off when paired with the $3 small option. But when you add the medium size for $6.50, the logic becomes that for just 50 cents more you can get the large size! What a steal!

 

Take advantage of the decoy effect by offering product plans in el salvador telegram number database sets of three and mixing in overpriced decoy options to make the mid-priced options look cheaper. This way you give customers a framework for perceiving price and value.

6. Loss Aversion

Loss aversion is the tendency for individuals to feel the pain of a loss twice as intensely as they feel the pleasure of a gain. So, while it doesn’t make much sense logically, losing $100 from your wallet is far more devastating than winning $100 is exciting. For example, a relatively small risk can easily dissuade someone from buying a stock even if the potential for a return on investment is very high.

 

This cognitive bias is often used in sales, where you offer a free trial of the product at first, and then once they’ve invested some time in the product and learned how to use it, the loss seems too great to give up so they opt to switch to a paid subscription. You can also set a time frame for the discount or announce “limited stock remaining” to appeal to their natural FOMO (fear of missing out), as missing out on a purchase can also be seen as a significant loss.