Airlines use three fare tiers instead of two to nudge customers toward the pricier option. A decoy middle choice makes the expensive fare feel reasonable. McDonald's does the same with base meal prices anchored low, then upsells a supersize for just a dollar more.
Here's how airlines sell higher-priced tickets on average. Rather than presenting a Comfort Plus versus an economy option, most people would just take the economy option. But it turns out when they offered the First Class, Economy Plus, and economy, more people took the Economy Plus package. Simply by changing what they offered, they got more people to take a more expensive package, and so they made more money. And it changed nothing about what they said, what they promised, or how they sold. They simply presented the prices and the options differently. And you can use the psychology behind this because what people do is they want to find a reasonable option. They don't want to be super expensive. They don't want to be really cheap, but oftentimes they'll go with the reasonable middle option.
I mean, Alex is my guy. Disagree with this a little bit here. Simply having 3 options doesn't mean that your customers are going to select that middle option. What it really comes down to is steering people down the right path of action through price anchoring. So I'll give you a good example of this. McDonald's, when you go through the drive-thru, they position a meal— I think Filet-O-Fish or whatever it is— they position their product just as a specific price. They're price anchoring that product to a specific number. Now, what do they then say? Would you like to supersize that? Get a large fry and large drink for an extra dollar. Of course, in that moment of time, no wonder we're all obese. Who wouldn't take that extra large fry and large drink for an extra dollar? Double the value for an extra dollar on the price. As you think of that as it relates to your products and services, you need to be price anchoring.
