Marketing is all about having an eye for details! The case of tiered pricing

 A common practice is to present consumers with multiple options that offer different levels of quality and price. Sometimes a "decoy" option (even almost never sold) is included, whose sole purpose is to give customers an incentive to buy another alternative that is most lucrative for the company. For example, an extreme option (better than best) is added to a choice set, making the original best option the middle/intermediate  choice that suddenly becomes more attractive to the consumer. For instance, if a company wants to sell more of a paperback version of a textbook, simply adding an additional premium version (e.g. hardcover format) as a more expensive choice option, makes the paperback seem more affordable for the consumer (Gu et al., 2018).

An important side note however is that adding a third "decoy" option to a two-options offer, may lead to less trust by consumers and may even trigger them to buy elsewhere (Fried, 2024). A company that offers only two options with a clear (and logical) quality/price trade-off may even be more attractive to consumers in some cases.

If a company uses more than two options, the "order" (important detail!) in which options are offered may make a difference as well. For instance, if a company wants to sell more of the "best" version of a product, it turns out that the order "best-better-good" ( e.g. rolling out a suite of smartphones starting from premium to cheaper ones) works better than the order "good-better-best" (Ulaga and Mansard, 2025).

References:

Gu, X., Kannan, P. K., & Ma, L. (2018), " Selling the Premium in Freemium", Journal of Marketing, 82(6), 10-27.

Fried, C. (2024), "A Common Marketing Nudge Can Foster Consumer Distrust", UCLA Anderson Review, retrieved from: https://anderson-review.ucla.edu/a-common-marketing-nudge-can-foster-consumer-distrust/

Ulaga, W. and Mansard, M., (2025), "Small Change, Big Rewards", INSEAD Knowledge, retrieved from: https://knowledge.insead.edu/marketing/small-change-big-rewards