The Decoy Effect & How To Use It In Your Social Media Agency Pricing

Plot twist: there's a reason behind which popcorn size you choose at the movie theatre (and we'll give you a hint, it's not the extra buttery-goodness!). Instead, it's because of the decoy effect they use with their offer!

What is the Decoy Effect?

The decoy effect, "describes how, when we are choosing between two alternatives, the addition of a third, less attractive option (the decoy) can influence our perception of the original two choices." In order words, you have two strong options and a less desirable third option that persuades you to towards your more attractive options. You'll ultimately have one "target" option, aka the option you most want to sell. This might be the highest-priced option, the lowest cost-to-make option for you, or the most profitable.

While you probably caught on to the decoy effect in your everyday life like the popcorn scenario, it's more common than you think! Not only can we use this in pricing, but you'll see the Decoy Effect being used in insurance, politics, and more categories that you deal with every day.

This can relate to products, like the popcorn example, or, to services. For example, if you are a social media scheduling tool company and you have three package options, you might have your first option be scheduling Instagram posts only for $5.00 per month, a second package that schedules Instagram posts and stories for $10.00 per month, and a third package that's $12.00 per month that schedules Instagram posts, stories, and Reels. Which of these three packages would you choose as a social media manager? Likely the third because it's the "most bang for your buck" option, right?

How To Use the Decoy Effect in Your Social Media Management Business's Pricing:

Craft three offers for your clients to choose from and watch the decoy effect work its magic!

Since package pricing is a common offer for social media managers, it makes this the perfect opportunity to leverage the decoy effect. However, it's crucial to approach this strategy ethically and thoughtfully.

The decoy effect isn't about manipulation; rather, it's a means to guide decision-making by presenting options that highlight value. To ensure ethical use, each offer should be robust, addressing the genuine needs of your ideal clients. The decoy should stand as a strong choice among the options, providing clear benefits without misleading or coercing clients into an unfavorable decision.

Many have criticized this tactic over the years for being deceptive; however, like anything, it's all about the thought that you put behind it. Ensure that all your offers are strong offers that are still crafted with your ideal client's needs at the heart of them, so it's still mutually beneficial for both parties. Your Decoy should still be a viable offer for your clients and shouldn't be misleading in any way. Just remember that it should be the best offer for YOU and YOUR CLIENTS!

It's about fostering a win-win situation, where your clients receive value and you maintain a sustainable business model. The decoy effect, when used conscientiously, can align your clients' preferences with your business goals.

We can't wait to see what you come up with! After you create your packages, make sure to run them through our free Package Checklist!