What is Decoy Pricing and how can your Small Business use it?

The Small business show episode 371 for Wednesday, March 16, 2022. Greetings folks and welcome to the Small Business show here at BusinessShow Co where we are small business ing every single one week. Sponsors for this episode include Shopify.com SBS and Banknovo.com SPS SBS, I should say. You can get your free business banking account@banknovo.com SBS in just 10 minutes and shopify.com SBS gets you a 14 day trial. We'll talk more in depth about each of those shortly here in the episode. For now here, back here in Durham, New Hampshire, I'm Dave Hamilton.

And in Lafayette, California, I'm Shannon Jean. Those are two great sponsors.

They go great together, in fact.

They do.

Yeah, that's right.

And the Shopify story is just a powerful one. I just read a who does that Stratecheri newsletter.

Oh, Ben Thompson.

Ben Thompson. He put together a great newsletter about how Shopify is the challenger to Amazon and how they have. But they're combining all their. I don't know, I think they have 800, 150,000 small business or sellers and the things they're doing to compete with Amazon, opening warehouses, doing all this stuff is really a fascinating story and a great company.

Interesting, huh? It makes sense, right? Because yeah, if you understand what Amazon actually is, then you see you're right that Shopify is putting up a good push back against that. Or a good alternative, I should say.

Yeah, I'll put the link in the show notes.

Okay, great.

It's a really interesting read about how they're structuring things. It's fascinating.

It's fascinating. Hey, I said in the intro that I'm back here in Durham, New Hampshire. I'm pretty sure we recorded an episode after I traveled to Mexico. Did I share my very valuable medical travel tip in last week's episode? I don't think I did.

I think you might have shared it with me, but I don't believe we talked about on the show.

Okay, well, perhaps I don't know what.

It is, so you never know.

Okay, well, I was in Mexico, as I mentioned, and I had a gastrointestinal issue while I was there. This was the first time I've been to Mexico many times and this was the first time that Montezuma's Revenge or whatever it was, came home to Rooster. Yeah, it happened. It started at maybe 11 o' clock on Sunday night and I waged an heroic battle until about 5am and was like, okay, I gotta figure something out here. Like this is not getting better, you know, like, what am I gonna do? And then I remembered 10 years ago, a pilot friend of mine told me, put Ciproflaxan in your travel case. He says it's the best thing to. It's an antibiotic. And he says, how do you get it? Well, good question. You can. Well, so I had the. 10 years ago or maybe 13 years ago, I had had a script for it for some reason, and they gave me more than I needed, and I had three of them left over. And when my friend told me this, I was like, okay, great, I'll put it in my travel case, right? So I did. And at 5am you know, on that fateful Monday morning, I. I remembered that I had it there and was like, oh, my gosh, this is it. Like, okay, the time has come. Because I'm not a big fan of just taking antibiotics for no good reason, right? So, you know, like, if I. If I had had, like, you know, maybe something that was difficult digesting after dinner, I wouldn't just jump to go and take these. Obviously, I didn't, because I had them there for 10 years and forgotten about them. And I'm like, I hope I still have them in here. And so I, you know, ripped open my travel case, and sure enough, there they were. I was like, you know, oh, and one. And within about an hour, I was back to like 90%. I mean, it took a couple days for it to completely, you know, be just gone. But it was amazing how quickly this thing started working. And. And so now that is a part of my travel kit. And I rec. I know it's kind of a weird thing to talk about here on the show, but I like, if you're on any kind of travel, but business travel, man, like, you need to be able to keep things under control. And when your gut is. Is fighting you, your gut win. It's just how it is. You know, you can't. It's not like, all right, well, my back hurts. Okay, I'll take some Advil and I'll go power through. Like, there is no power through. When. When your gut decides that you're going to stay in the bathroom, that's it. Yeah, it wins. But as far as how to get it, you can certainly ask your doctor for it. I know of people that have gone to their doctors and said, hey, I do quite a bit of travel, especially international travel, where you. You would be more apt to run into these kinds of things. Depending on your doctor, they may or may not be hesitant to just randomly prescribe antibiotics for you, but if you happen to be in Mexico as I was, and I realized that I was gonna run out of this stuff, I just went to the concierge at the resort and told them. I said, I don't wanna see the doctor here at the resort, but, you know, I wanna, I need more antibiotics. And the woman looked me in the eye and she says, do you know exactly what you need? I said, I do. Ciproflaxan. She said, okay. And she handed me what I will now call a. A Mexican prescription pad. I call it you. And I would call it a post it notes. It's yellow square thing, you know, little stickies on the top. So I wrote ciproflaxin on that. She picked up her phone, you know, 30 seconds later, she says, it's going to be $35 US for 14500 milligram tablets deliver. That includes the delivery fee. Is that okay? And I said, of course it is. You know, she gets back on the phone, she says, it'll be here in two hours. Give me the 35 bucks. And so I gave her the 35 bucks and a tip for her and, you know, on my way. So, yeah, yeah. I will say this, though. Learn what you are and are not allowed to import into the country as a regular citizen coming back, because Cipro may or may not be on the list of things that, that the. Whatever the customs does not want you to be traveling into the country with. So I leave that up to the.

Always a good thing.

I leave that up to the listener. Make your own decisions, do your own research on that. Figure out what is good and not good to do. But certainly, you know, there's my. Yeah, that ends my advice.

No, that's great. Hey, I have a question for you.

Yeah, man.

What's the. What's the price of gas in your fuel, if you will, for your vehicle in your area?

Yeah, I saw it. You know, I don't fuel up. I fuel up maybe once a month. I do have to put fuel in my car within the next couple of days here, but it's been dancing. The last I looked, which was just a couple of days ago. We are recording this on March 8th. For anyone who's keeping track at home, I saw it. It had gone over $4 a gallon and then was just under. Which is, you know, relatively high for us here. It's usually about a dollar a gallon less than that. So. Yeah.

Oh, yeah, yeah, yeah, yeah. We're over five, approaching six.

Well, you have Californian taxes baked into.

15 the state adds to every gallon of gas.

Yeah, There you go.

So nice of them.

Well, it's, it's good, you know.

Yeah, but everything's getting more expensive. You know, we've talked about pricing and all this different stuff. And, you know, last year we kind of alluded to this concept of decoy pricing, which I would love to talk about today.

Yeah, I would. I would love to talk about that too. The first thing that I would or the next thing that I would love to talk about, if it works for you, are our two sponsors for this episode.

Yeah, let's do it. I love these guys.

All right. Hey, listen. You know, fortune favors the bold, the strong, the brave. And for our businesses to break out of anything that's holding us back, we need business checking. As brave as we are. And that is where our sponsor comes in. Introducing Novo Business Checking. Novo is powerfully simple business checking. And unlike the traditional banking model, Novo has no minimum imbalances, no transaction limits and no hidden fees. Instead of a one size fits all approach, Novo is customized to your business, to our businesses, to save us time and free up our cash flow with seamless integrations to things like Stripe Shopify, QuickBooks Online and more. And you can sign up for Novo for free and join the community of over 150,000 fearless people who are small businessing every week. Just like us, who have found the customizable business checking solution that admires their ability to be brave. Sign up for your free business checking account right now at Novo co sbs. Plus because you're a small business show listener, you get access to over $5,000 in perks and discounts. Go to Novo N O V O CO SBS to sign up for free. Novo CO SBS. Novo Platform Inc. Is a fintech, not a bank. Banking services provided by Middlesex Federal Savings FAA member fdic. Terms and conditions apply. And our thanks to Novo for sponsoring this episode. There's that sound again. I love that sound. Because that is the sound of another sale on Shopify. The all in one commerce platform to start with, run and grow our businesses. Shopify is a platform that it's designed for anyone to sell anywhere. Giving entrepreneurs like us the resources once reserved for big business. Customized for our needs. With great looking online stores that bring our ideas to life and tools that allow us to manage our day to day and drive sales. Making your idea real opens endless possibilities. It's a journey. But you know, that's the beauty of small businessing here, right? That's what we do. And Shannon and I, we've both Used Shopify for various things in our business histories here because they make it easy. Why would we want to reinvent the wheel when Shopify is already rolling? Shopify powers millions of entrepreneurs just like us from first sale to full scale. Every 28 seconds, a small business owner makes their first sale on Shopify. And you can get started building and customizing your online store with no coding or Design experience necessary. Plus, with 24. 7 support, you're never alone. And it's more than just a store. Shopify grows with you. So go to shopify.comsbs all lowercase for a free 14 day trial and you get full access to Shopify's entire suite of features. Start selling on Shopify today. Go to shopify.com SBS right now. Shopify.com SBS and our thanks to Shopify for sponsoring this episode. All right, Shannon. Decoy pricing. I never, not only did I never consider this concept, I thought that it was employed very differently. And I'll. Well, I'm naive, you know, because I don't know anything until I learn it. And yeah, that's true. Right. Well.

And you're not a product guy, per se.

No.

You are selling a product.

Sure.

Different.

But it's different. Yeah, but yeah, I always thought, you know, we're going to talk about what decoy pricing is, but it's essentially the idea, it is an idea of adding in a third option to two other options to encourage people to go one direction or another. The way I had always employed this in my business was the bronze, silver, gold mentality. And it was like, okay, well, you want everybody to buy silver. That's the product that you offer, but you're going to offer this less value for a lower price and that's bronze. And so the way I always did it. And again, this is just my being naive. I threw in the gold as the extra one so that people could see, oh, there's this amazing thing up here. I'll go to the silver. Nobody buys the gold. I'll go, you know, silver works for me. That's how I always looked at this, to add the third option. Yeah.

And that's, that's actually a part, a piece of decoy pricing called anchoring. And it's kind of that good, better, best concept. Yeah.

Right.

And I do want to talk about that.

Okay.

And how that kind of relates to this decoy pricing thing. And you actually came up, you know, brought this concept in me, I've used it. Yeah, you brought it up as a strategy. You found this Twitter.

Yeah, I found a Twitter thread about it. Yeah, it was great.

And I thought it was a really good topic to discuss. You know, a great example that probably all of us know is the popcorn at the movie theater.

Right.

Okay, small, medium, large. So the small is like $3.50. The medium is $6.50. But the large, you know, it's a significant gap between small, medium. The large is only a buck more. It's 750. And in that case, they actually want you to buy the large size.

Right. This is the part that blew my mind that it's, it's, it's engineered to put you at the top, not in the middle. Yeah.

It's the same reason why if you're ordering a drink and maybe the wait staff or the person would say, well, you know, would you like, like if you order a beer, they say, well, the 16 ounces, you know, whatever, five bucks.

Right.

But you know, I can do the 20 for six.

Right. Yeah.

And so you think, oh, well, I'm going to give, you know, they're, they're, they're upselling you into their most profitable product. And like on the popcorn, the large is the most profitable product for them because the increased cost of goods is, is nominal.

Right.

And the decoy in that case is the medium.

Right. This was the part that blew me away. Yeah. But it's right. I mean, it's correct. It just, I, I was blind to this and I've, I mean, I've definitely been fallen, Fallen, you know, I'll say victim to it. Although, you know, there's things.

We're all manipulated.

Yeah, we're all. Yeah, I've been manipulated by this for sure. Over time.

And restaurants, you know. I'm sorry, go ahead.

No, no, I, it just never dawned on me. Yeah. No, yeah.

You look at menus, they're designed the same way. So if you like, especially at a place like Cheesesteak Factory, if you ever go to one of those where the menu is like 100 pages long or something.

Yeah.

And when you're looking at the book.

Yeah.

Yeah. They're highlighting photos. And the whole way it's created is to point you to order the most profitable dish for them. And especially if they're highlighting it, you know, in a photo. And so it happens all around us every single day. I would say, you know, going back to my gas pump thing, it's probably happening at the gas pump, you know, premium and, and you know, regular gas. Right. Even though all these, you know, high end cars tell you to put premium in, I don't know. I know some people probably do it, but I'm not sure how many do it right now.

Well, maybe not right now. Yeah, I, I talked to a friend who was the sales manager at a Volvo dealership years ago about that and I had bought a Volvo from him. It was great. He gave it to me as a house deal which was he did not have to do, blew me away. But I asked him, I was like, this was the first car I ever bought new for myself. I bought new cars for like my W and stuff, but it was the first one I ever bought new for myself. And I asked him, I said, you know, what should I do in terms of the gas? He's like, no, no, no, no on these cars because they have turbo, you know, it had a turbo engine. It was that weird five cylinder Volvo engine. He's like, you definitely want to, you know, run the premium. Yeah. He's like, definitely run the premium in it. He's like, you probably get better gas mileage. He's like, you will get better gas mileage. He's like, yeah, it's the right thing to do. Yeah, yeah, yeah. But that's not, I mean if general, as I understand it, please let us know if we're wrong because like these are good tips here. Feedbackus show co I've based on the people I've spoken with, mechanics, the people that don't have a vested interest in selling me gasoline, but otherwise know a thing or two about vehicles, you know, in a professional capacity. They have always told me, follow the manufacturer's recommendations. Whatever the manufacturer tells you to put in, put that in. Don't go any higher than that and you're gonna be, you're fine. But don't go lower either. Like, you know, buy what they tell you to buy and you're in good shape. So that's what I've always followed. But I could be, I mean, you know, I'm a naive, I'm an idiot. I don't know anything until I learn it. Yeah.

So on this decoy pricing thing, there's typically like three choices. You know, a low end, a medium and high priced. And you get to decide where's your highest profit margin. It may not be the high end, right? The high end you may put on there to just attract a certain clientele, but also to make your medium or your good better best. You're better look like a better value. And you're going to use that to point your customers to the product that you want them to buy. And another way to do it. Like I used to look at this and go, well, I don't know how to do it. I don't make these products.

Right. How do you know? Yeah, yeah.

I don't know what to put. You know, maybe figure it out. But another great way if you're a product seller or a service provider is bundling and features. So if you're out in the service field or whatever, if you're an H VAC business and you're going to people's houses, well, you could definitely have three tiers of service. You have the entry level tier that gets their attention when they're looking on Yelp or looking whatever, to get somebody to come to their house. Like the, hey, we'll clean your ducks for 75 bucks, whatever that is. And then there's another one and a high end. And maybe what you're looking for is you. How many you want 80% of your customers to buy that medium level. And maybe, you know, 10% to buy the high end and 10% by the low end. You get to decide. But I'll give you a good example. It's kind of a different way to think about it. And I found this online when I was doing some research for the show and the Economist, which is a financial newspaper. They sell three different packages, right? So they sell their digital edition and it's 50 bucks a year. They sell their print edition and it's 150 bucks, or they sell the print and the Digital Edition for 150. So they're using the decoy to encourage you to get the complete bundle, not just the digital version, because the digital edition is kind of perceived to be free. If you get that, that print and digital and people like free things. And it looks like it's a lot of value, but I don't know that it's costing the Economist anything else.

No. And it gives them the ability to say, hey, look, we have. Because they're also going to show you ads, right? Like, you know, or even if they don't show you those ads, which they probably will, they, they will use your numbers, like en masse, you as a number to show sponsors how many people they have. And they get to say, we have, you know, whatever, a million people on the print and 4 million people on the digital. Even though there's an overlap of exactly a million people. The same people that are on print are also on digital. They get to count you twice. Yeah.

And they don't want to sell the digital edition by itself.

Clearly.

They, they, yeah, they want to Bundle, you know, this other thing. So it's, you know, it's economists doing it. You would think these folks out of anybody would know what works.

Right, right, yeah, that's a fair point.

But it's a different kind of thing. And, and I think that bundling is, it also makes it, it's a huge benefit to you because it makes it harder for people to, to price shop and to compare prices on stuff.

Yeah.

You know, you want to see a crazy example? You go to Amazon, look for like a DSLR cameras, okay. And the bundles that are included with these camera. Rarely is there a merchant just selling the camera because the camera's commodity. Right. There's, it's just price. Okay, I'm getting this Nikon, whatever.

Yeah, this is what it is. Yeah, it's like buying an Xbox. You're going to, you'd be hard pressed to buy an Xbox without buying games. Especially if you're buying this year's newest model of Xbox. Right. Like once it's out on the market, then fine, they'll just sell you a friggin Xbox, like whatever you want. You know, if you want to get it on day one. You're buying a bundle. Yeah, buying a bundle.

And you know, if you're looking for like this camera example or whatever, I mean it's amazing, you know, there's tripods and cases and this, and SD cards and every company has a different bundle. It makes it much more difficult for people to compare prices.

You can't compare.

No. And each bundle is unique. So you're looking at it and it's like, wow, look at this. Even the imagery, there's like 20 items or 30 items included in this bundle. And you say, well the camera is 1200 bucks or whatever, but man, for this, this place has, you know, 20 other items for $200 more. Well, all the profit might be in those 20 items.

Right? Of course they are. Right, yeah. Because your, your camera is going to be a low margin item for the reseller, you know, for whoever that is. Yeah, yeah.

The manufacturer.

Yeah, yeah. Not for the manufacturer. Right, yeah.

So look at your services and think about what you could put together. And you know, like we used to bundle longer warranties, you know, all kinds of stuff to get to just try to differentiate how it gets done. Faster turnaround for us, we were in the repair business, so turnaround time was a huge, you know, feature that we could add to our service. So you got to pick. Okay, well our standard turnaround time is this is 24 hours. But if you go with this route, you can have it faster, or if you're not in a rush, you could save a little bit of money, you know, and, and most people, we push to this 24 hour turnaround time because that was our, kind of, our sweet spot of, you know, getting things done.

Yeah, you could, you could get it done.

Yeah, yeah, you get it done. So there's, you have to really broaden your view of how this might work for you.

This is fascinating because we talk on this show often about being cautious with your business, about competing on price alone. Right. That's a dangerous thing because it becomes a race to the bottom, you versus your competitors. And everybody loses except the customer. But even the customer loses with price based competition because in the end they start losing options from whom to buy, right?

Eventually, yeah, because that's how it works. I can tell you from being in the commodity business my whole life, you know, electronics, it's a race to the bottom. And then one day as a business owner, you say, we can't sell that anymore.

Right.

Then you're, you constantly have to be replacing the food chain of products, which is what eventually drove us into the service business. Because there was just no more margin in the products.

Right.

As, as the products, products got more simplified with less parts that would break.

Yep. That I could sell.

I mean, you know, I think, uh, I mean, I can remember back. This really dates me. But you know, I, I was, I think I bought a house with this by selling floppy drives, you know, that were always, you know, floppy drives for 125 bucks. They had all these moving parts. They failed like crazy. And, and you would go, but as that disappeared, CD ROMs disappeared, DVDs disappeared, you know, all that kind of stuff, we just kept, okay, can't be in this business anymore. What else can we do? Next, Next, next, next. And you're constantly having to change what you do and to look out into the future. And it's a good point you bring up is as those prices get driven to the bottom, there is less choice for the customer.

Yeah, it hurts the customer in the end because it just hurts the whole market. But if you, but you still need to find a way to compete. You know, my favorite way to compete is on service. Right. Like you, you, you deliver to your customers in a way that, that they want to keep you in business so that they can continue to use you. And that's a, like, that's been my whole thing throughout my career is like, yeah, of course I charge more, I'm better, you know, and Just leave it at that. You actually have to be better in whatever it is you're doing. Yeah.

And harder to get that across in an E commerce setting.

Right. And the other thing, but with bundles like that's the, that's the alternative here is you, you can be better by offering a better bundle that targets what your customers like. Sure. You can pick a bundle of things that offer high profit margin items and there's nothing wrong with that inherently. However, I would advise if I were doing it, you can take this as advice or not just remember what you paid for it. I would put it together in such a way that it was what I would want to buy if I were the customer. You know, like, okay, you're adding value and that is me or our business adding value. Right. We've, we've gone through, we've figured out what you want or what most people want and we put it together and yeah, if we sold you all these things individually, we would charge you more, but we're going to shave some of that off. And now we've put it together for you. We've taken the headache away that.

And you're going to buy it anyway, right?

You're going to buy it. You're buying the core item, whatever it is anyway. Yes. Right. So now we've taken your headache away. And to me, that's been my at Backbeat. That was our slogan when we came out and it's still our prime directive is we take publishers headaches away. That's our job initially, believe it or not, it was hosting websites was one of the main things that we offered in addition to sponsorship management. But hosting their website was huge because 23 years ago there was no dream host.

That's right.

Right. You know, so we, but of course we've evolved. Do we do that for anybody now? I mean, yeah, we'll do it if you want, but you don't need us.

To like, it's a commodity.

It's a commodity. It's not a headache that, that, that plagues most people. So we, we, we don't bother with it as much, you know. Yeah.

And the other thing to remember along with, you know, it's good customer service that, you know, differentiates yourself, but it's also story. We, we talk a lot about it on this show. If you just go to businessshow.co and search the word story, we've got a number of episodes that we've talk what is your story? You know, why, why are you doing this? You know, what got you in the business I mean that. Share that with your customers. Talk about, you know, it's like the, the Jay Peterman Seinfeld thing where the guy is describing everything that connects with people on an emotional level. You can do that on your product pages, you know, and the impact talk share the impact of what your products or services are having in people's lives and, and you connect on another level and you stand out is a very, very important part.

It make your story is unique. Right. Or at least you can make it unique.

Not a commodity.

It's not a commodity. Right. And I mean, you heard me, just do it without even thinking about it because it's something I do all the time. I told the story of how we take publishers headaches away. Oh, okay. Well, that's interesting. That's far more interesting than me saying, well, we just will manage your sponsorships for you. I mean, like, that might be attractive to you if you've already been down the path and you know, you don't want to do that. Great. But yeah, we take publishers headaches away. That's great. That's a good story.

It is.

Yeah.

And you can say it in a sentence, right?

And I can say it in a sentence and I can tell you we started this business because we were publishers and we took our own headache away. And then we knew that other people were going to need that because you came to us and told us so. We started this business at your request. Not you specifically, but people just like you asked us to create this business, which is literally true. You know, but. But we get to. We can choose whether or not to tell that story. I choose to tell it because it.

Yeah.

Because it makes people more comfortable. Yeah. Yeah.

And it doesn't matter how, how small or big you are. If you, if you learn about Shopify one of our small, you'll. You'll. You'll learn that it was started by Toby, this guy who was a snowboarder that wanted to sell snowboard stuff. And it turned out that as he built some software and not very many people wanted to buy a snowboard stuff, but lots of people wanted to buy his software that because it worked so great for E commerce and you know, this was like 15 years ago, whatever, maybe even a little more. So that's their origin story and they share that all the time.

That's amazing. I am looking it up. Yeah. Yeah, you're right. Tobias. Toby. T O B I. Yeah, yeah, yeah.

If you will link that Stratecherry article.

I've already put it in the show Notes. Yep.

In the show notes. You can read about it in there too. And, you know, there's a number of numerous podcasts where, you know, they tell their story because, you know, it's not just about, oh, we make websites and e commerce and it's cool. No, no, no, no, man. We change people's lives, we empower entrepreneurs. And, you know, every 28 seconds there's a first sale on our site. That's your story. That helps differentiate yourself. And I don't care if you're a local little small business with a couple of people doing something that's important to your community or helping people, there's something in there that you can tease out and it helps differentiate yourself and that, you know, because it's going to help you set up concepts like decoy pricing and all that kind of stuff.

Amazing. I had no idea. This makes. I love this story. I mean, I like Shopify anyway because they solve a problem. But yeah, of course, this guy was a programmer, also a snowboarder. There you go.

Yep. Yeah, that's it.

Scratch the niche.

So one thing, yeah. When you mentioned at the beginning of the show was this, this also this concept of anchoring and it's kind of a part of decoy pricing.

Okay, yeah, right, yeah.

And, and I, I just want to briefly, you know, touch on that, that anchoring is the concept where you kind of, you create higher priced options for similar items. And, and there's lots of different examples. One is like if you walk into some fancy clothing outlet and let's say you go into, you know, whatever. I don't, I don't know these brands. I'm not a fashion guy, but even though I own a fashion business, it's sort of irrelevant.

Yeah, yeah, yeah, yeah. I was, I, I didn't know a thing about like, sales, sales when we started Backbeat. And that was, I will tell you, that was super helpful because I couldn't do the job. I had to delegate. I had to hire people that knew how to do this better than me over the years.

Next week's show.

Yeah, yeah, I learned how to, how to do sales and that, that actually started to hurt the business because I started becoming a micromanager with it.

Well, you know, save that thought because next week we're going to do a show all about delegating. And your comment is really spot on about one of the reasons or how delegation works.

Well, I hope you folks are going to want to listen. I'm definitely going to want to listen to next week because I am the one that has the most to learn in this regard.

So we'll see. We'll see. So with anchoring, let's say you go into the Louis Vuitton store or whatever and they're selling bags and clothes and everything. And there's, there's T shirts or shirts, let's say that are, you know, $250 and you think, wow, man, 250 bucks for a T shirt. But then you go over and there's a rack with T shirts that are 75 bucks. And even though, you know, if, you know, you're like, wow, 75 bucks. But you know, compared to those, that's a good deal.

Right?

Compared to the $250 shirt. So they're pushing you to that lower priced item and they're tricking you into thinking that's a value because you're comparing it to that anchor item. Apple famously did this with the $10,000 gold Apple Watch. Right. And you know, it's ridiculous, but when you look compared to that, you look down like, well, these are 500 whatever they were when they first came out.

Yeah, yeah, yeah.

You know, you want to set their expectation. It's also one of the reasons why car manufacturers have so many different levels of high end cars. And having just gone through this, I just bought a car last week from my wife and you just see it, how they're anchoring you. Well, this version is X, $10,000 more than this. And you get all these little, all these extra things, but they're pushing you to, I would imagine. Well, I don't know what their most profitable line is, but it's one way to get you comfortable with spending a certain dollar amount that maybe you wouldn't because you think that's a good deal compared to X. So think, think about how you might, you know, change people. Like maybe in my case, in the service business, if you had our standard turnaround time, let's say you did two or three days and that was 100 bucks, for example, and then you had this 24 hour turnaround time that was 150, but then you had like a two hour turnaround time that was $300. Right. And you want to push, you're pushing people to that 24 hour spot because that was our sweet spot. So there's different ways to do it. You just have to look at it and see how you can apply it to your business.

Amazing.

Yeah, it's a fascinating concept.

Yeah.

No, I never look at a restaurant menu the same again.

Well, and what, because I thought anchoring was the only way I looked at everything from that perspective. Right. I mean, it's, you know, I mean, this is the beauty of, of mild ignorance. Right. For better and for worse. I'm not necessarily lobbying for ignorance, but it's just how it goes. I had no idea of this decoy pricing thing, but now I looked at popcorn as like, oh, medium is probably the right value here. I can tell they're trying to get me to go to large. They're even saying, we'll do free refills on that. But no, the way I do it is I make the more expensive one. I do the anchoring thing. And so medium, I know that's where the value is. The. But I never stopped and actually did the math. And as soon as I did, it's like, oh, wait, wait, wait. I fooled myself. Like, I, I literally outsmarted myself is what happened. Yep.

Have you seen online where, you know, somebody will buy the extra large drink and, and they pour, you know, in a large drink and then you pour the large drink in the extra large cup and it's like literally an inch less of, you know, whatever it is you're drinking. You paid 50 cents more.

Yeah.

You know, and, and especially when it comes to like, soda that costs, you know, pennies for the actual soda, the cup is the most expensive part.

That's right.

You know, it's, it's, it's fascinating. So we're all getting, you know, manipulated on pricing all the time.

Maybe, maybe it was. Was it Chris Rock and I'm gonna get you, sucker. Who we don't swear on the show. So I'll say his, his famous line was, forget the cup, pour my hand for a dime. Right. Like that's my.

Yeah, but we'd love to hear how you or your take on decoy pricing or anchoring, how you use it in your business feedback. Businessshow.co. or if you have any questions and you'd like us to take a shot on answering them on the show. Feedbackusinessshow.co. we'd love to hear from you.

Yeah, absolutely. Make sure to check out our sponsors. As we mentioned, banknovo.com SBS and shopify.com SBS Lots of Shopify talking this episode, not just the sponsor spot. Yeah, it's good stuff. I can't believe that that's snowboarding thing. It's. I love this story. This is why I like doing this show. I, I get to learn. So. Yeah, there you go. Come let us know what you think. Feedbackus show co. As Shannon said, and then come back next week with us. And let's talk about delegating, too. That's. That's one I'm going to learn even more from. So keep living that charm life, folks. We'll see you next week.