It would be very smart of you to provide your prospects with pricing options. There are a few benefits to that. But you still need to be careful. Giving too many options is not the best policy. And the reason for that is called decision fatigue. This pricing strategy is not appropriate for each and every product that exists, but I want you to pay close attention and see if you can incorporate it into your business.

The fourth benefit of providing pricing options or pricing plans is flexibility, flexibility for your prospects. However, flexibility does not mean the best price it means flexibility, or it might be even better to say accessibility, which is crucially important. For example, right now, I offer two pricing options for a premium program. Option number one most flexible, for the full step by step. Your first 1000 students, you will be paying only 197 a month for three months, it's important to know that you get instant access after your first payment. Option number two best value, or you can save $94 and painful for 97.

Let me tell you roughly 50% of my sales come from option number one most flexible in the other 50% come from option number two best value. And I can say confidently that if I hadn't created option number one most flexible, I would have been losing sales. Some of my colleagues went further and they created a 12 month pricing option. I'm considering adding such an option as well. And of course I will share the results with you so much for the first benefit. As you can see, this is not something revolutionary, but it works.

The Things are getting more complex when we talk about pricing options with different benefits. Now we can play with the decoy effect. And if you've taken my course on marketing psychology 1.0, you might remember this phenomena. If not, here it is, again, the decoy effect is the phenomena, whereby consumers will tend to have a specific change in preference between two options, when also presented with a third option that is as symmetrically dominated. An option is a symmetrically dominated when it is inferior in all respects to one option, but in comparison to the other option. It is inferior in some respects, and superior in others.

So this was the scientific definition. Let's simplify with pictures and examples. Now, I would ask you to choose one of the three options you have. I'm going to give you five seconds, please make your choice. Okay, I feel like eating a fruit in the picture, I have three options to choose from. The first option is an orange.

The second and third options, I have two apples. However, the latter is dictate what I and the majority of you guys would choose, I believe the higher percentage of us chose the red apple. The third option is so bad that it makes my choice a lot easier. Of course, some of you went with the orange, but the majority chose the red apple. Now, if I give you only the first two options to choose from, then your choice wouldn't be influenced by any other less attractive or more appealing option. Here is another picture.

This is how the decoy effect works. It changes your opinion by adding different, less attractive options. The green circle on the left looks too small to me, whereas the greens circle on the right looks too big. But in reality, these two circles are the same size. My opinion was influenced by the decoy effect. I'm going to give you an example, please focus on the part of the definition.

Consumers tend to change their preference between two options when the third less attractive option is presented. An old subscription page in the economist stated web subscription $59 print subscription $125. Weapon print subscription $125. Seems like a super deal for weapon print. Right? Professor Dan arlie tested this model with students at MIT, asking them to choose a subscription option.

Among these three options listed by the economist. The results web subscription 16 students, print subscription, zero students Web in print subscription ad for students total revenue $11,444. When the principal scription was removed, the results looked like this web subscription 68 students web in print subscription 32 students total revenue $8,012 do make the analogy with the fruits I showed you. The principle scription by itself for $125 was the detailed apple. It made the weapon print subscription look like a great deal. The example shows a 30% difference in sales for the economist by using a decoy price of a print subscription.

You can find this example in the book predictably irrational by Dan early. Some of the biggest companies in the world utilize the decoy effect quite profitably. Another example would be apple and their decoy pricing on Bought, again, two variables price in gigabytes. All other specifications are the same. Unless you're 100% convinced that 16 gigabytes are enough for your needs, you need to see the other options. For $100 you get 16 gigabytes more.

This is option number two, for another $100, you get 32 gigabytes more option number three, this is how they influence your decision to buy a more expensive iPad. Alright, as you can see, the decoy effect is quite powerful and you can put it into work to your advantage. Apple does it they kind of miss magazine did it well, they might have gone a bit too aggressive with this tactic, but still, you must have at least two variables. The first one being the price. The second one might be anything. It is really product dependent.

It might be more benefits or it may be more products. My advice is If you are going to use this tactic don't create a completely useless option. Another important point here is design. Use good design to your advantage and show your prospects that they have to choose most popular. I'm sure you've seen these, for example, the pricing plans of get response. You can see the emphasis on the plan you want.

They want you to choose right. Another example godaddy.com. Take a look at the last one more power in security. Whoo, I want that. How about Infusionsoft? What is interesting here, they don't have a design element.

As in the previous two examples, there is something else that made me an impression. When they opened the page, it says select an annual plan. And the complete plan is already selected for me. I didn't select it is by default, but come to think It, it looks great because I get the four main features they offer CRM, marketing automation, Sales Automation in e commerce. Before we recap, I've got a quick action step, go to YouTube and type the decoy effect, then find the video with the popcorn $3 in $7 it's only two minutes, but it's fun and you're going to like it. Alright, let's recap.

Offering different pricing options might increase your sales, you have to be careful not to give too many options, beware decision fatigue. Number two, consumers tend to change their preference between two options when a third or less attractive option is presented. Don't go overboard with this tactic. To use the decoy effect, you need to have at least two variables. The first one is always the price. And number four, use good design to show your prospect what pricing option to choose.

Thank you for watching. Stay purposeful