Let’s say you have a low-priced option and a higher-priced option for your product. You are using pricing tiers, aren’t you?
You can persuade more people to buy the higher-priced option by adding a middle tier. The middle tier doesn’t exist for customers to purchase, but instead to increase the perceived value of the more expensive plan.
Imagine you run a fast food restaurant, and your soda pricing looks like this:
- Large: $3 (36oz)
- Small: $1 (12oz)
The price of the Large seems fair since it’s the same $/oz as the small, but you can artificially enhance its value with the addition of a middle tier:
- Large: $3 (36oz)
- Medium: $2.75 (24oz)
- Small: $1 (12oz)
By increasing the relative cost of the Medium soft drink, it inflates the value of the Large option. This new pricing makes the Large look like a great deal. In fact, you can even make the middle-tier cost the same amount as the most expensive option if you’re feeling so bold.