Decoy pricing is a pricing technique that introduces a deliberately less attractive option to make another option appear better value by comparison. The decoy is usually designed so that a target choice clearly offers more for a similar price, or similar value for a lower price, making the target more appealing.
Customers often compare options rather than evaluating each price in isolation. A carefully structured third option can influence that comparison. In behavioural economics, the decoy is often described as an asymmetrically dominated option: it is less attractive than the target on relevant dimensions, but not necessarily less attractive than every other option.
A restaurant might offer two wine packages with different bottle selections and prices, then introduce a third package that costs nearly as much as the preferred package but includes noticeably less value. The preferred package may then seem more attractive. The comparison works only when guests can understand the differences between the options; simply listing a very expensive item is not automatically decoy pricing.
Anchoring occurs when an initial price or reference point influences how a later price is perceived. Decoy pricing uses the structure of several choices to influence preference for a particular option. A high-priced menu item may act as an anchor without functioning as a true decoy.
Menu descriptions, prices, portions and inclusions should be accurate and transparent. A decoy should not rely on misleading claims, hidden fees or false comparisons. Evaluate the effect using actual sales mix, contribution and guest response, while ensuring that every option remains commercially and operationally sensible.
Example: A restaurant offers three clearly described tasting packages. The middle package includes substantially more than a similarly priced lower-value package, making the middle choice the target option for some guests.
Chef’s tip: Test menu choices with real sales data. A pricing structure that looks persuasive on paper may not influence guests as expected, and it should never undermine trust.
Key distinction: Decoy pricing uses a deliberately structured comparison to influence choice. Anchoring relies on a reference price or first impression to shape perceived value.
This term is one of hundreds covered in depth across OCS courses, learning paths, and 1-on-1 coaching with Chef Eric.
