The Decoy Effect, sometimes known as the Asymmetric Dominance Effect, is a concept that revolves around introducing a third option (the "decoy") that changes how customers perceive the other two options, ultimately guiding them towards a particular choice.
For Etsy sellers, where customers often compare multiple options, this can help steer them toward a higher price item or a larger order value.
Applying the Decoy Effect to Your Etsy Shop
One way to create an effective decoy is by increasing the price of the 'decoy' option to be close to your 'target option'. This makes the decoy option seems less attractive and the target option appear to be a better value and a more attractive deal.
For example, let's say you sell handmade candles. You could structure your pricing like this:
- Small candle: $15 (decoy)
- Medium candle: $20 (target option)
- Large candle: $40
In this example, the medium candle appears to offer better value compared to the small candle, as it’s only $5 extra. This subtle nudge can encourage customers to choose the medium option over the small one, potentially increasing your average order value.
To do this even more effectively, clearly outline the benefits of your target option in comparison to the decoy, especially when the differences aren't as obvious as size. Use bullet points or visuals in your listing to make these differences stand out.
For example, if your target option uses higher quality materials that last longer, make sure to emphasise this in your product description. You might write something like “the waxed canvas lasts up to 80% longer than the cotton option, and it’s water-resistant which makes your grocery safe even in the rain”.
By framing the price differences this way, you make the jump to higher-priced items seem smaller and more justifiable, potentially increasing your overall order value.