Decoy pricing, also called asymmetric dominance, involves introducing a third pricing option specifically designed to make one of the other options more appealing. The decoy is priced to be clearly inferior to the target option, steering customers toward the choice the seller wants them to make.
The classic example: A small coffee costs $3, large costs $5, and medium costs $4.50. The medium (decoy) makes the large appear to be a much better value—for just 50 cents more, you get significantly more coffee. Without the decoy, more customers would choose the small.
In DTC ecommerce, decoy pricing appears in subscription tiers, product bundles, and size options. For example, a skincare brand might offer 1oz for $30, 2oz for $50, and 3oz for $55. The 2oz option (decoy) makes the 3oz seem like an obvious choice, increasing average order value.