How To Use Psychology To Improve Your Conversion Rate

Dan Ariely gave a presentation that broke down the psychology behind The Economist’s pricing structure.

The Economist used to have three price points:

Looking at it, the print-only option looks pointless.

But, it’s not.

Dan Ariely led a study where he gathered 100 MIT students and presented them with two different pricing options.

He presented the first 100 students with the current pricing structure:

But, when Dan Ariely eliminated the middle option and presented it to another 100 students - the results changed:

So, what was the most popular option became the least desired option.

Now:

So, what seemed useless was useful in helping consumers determine what they wanted.

Because the middle option served as a decoy to make the premium purchase look like an unbeatable deal.

This is called The Decoy Effect.

But here’s how to make it even better.

Harry Molyneux asked a great question on Twitter, “Can you guess the winning test variant?”

And one of the variants is more than $20k per month more valuable than the other.

Here are the options:

The correct answer is B.

Here’s why:

So, Putting It All Together:

Use the decoy effect to help consumers determine what they want
Add a middle option that makes the premium purchase seem like a great deal
Use a different color to make the premium purchase eye-catching
Make the comparison price or original price much larger than the discounted cost
Minimize the mental costs by adding a price per day that shrinks the cost with logic