The iPhone X and Decoy Pricing

Retailers often manipulate our spending habits. For instance, every time you shop, your choices are likely influenced by pricing tactics like BOGO, anchoring and high-end pricing.

And then there’s the tactic favored by Apple: decoy pricing.

There are several ways to employ decoy pricing, but every instance includes one product whose sole purpose is to promote the sale of another product.

Say you walk into the ice cream store and notice three different-sized ice cream cones available for purchase. A small ice cream is $2, a medium-sized cone is $5 and a large cone is $6. When presented with this choice, most people choose the large – at just one dollar more than the medium, it appears to be a fantastic deal.

The medium is only on the menu to serve as a price decoy for manipulating consumers into choosing the large. Now let’s take a look at how the Apple company uses decoy pricing.

Approximately a year after the iPhone 7 hit stores, Apple introduced the iPhone 8 and the iPhone X. What do these new phones have to offer?

The iPhone 8 and 8 Plus, priced at $799, look shockingly similar to the iPhone 7. A closer look, though, reveals that they offer an improved battery life and an updated camera. The iPhone X, on the other hand, stands out as the first phone with a four-digit price tag. The pricey device offers facial recognition, wireless charging and a full screen.

Experts believe that, in order to get people to shell out over a thousand bucks for a phone, Apple introduced the iPhone 8 as a price decoy. A consumer looking to buy a new iPhone this year has three primary choices.

The cheapest option is the iPhone 7. These are great phones that have been on the market for a year and whose prices have gone down to $750. Next is the iPhone 8 for $800. These are new to the market and offer slight improvements on the iPhone 7s. Lastly, there’s the choice of spending a thousand dollars on the brand-new iPhone X, expected to be an instant status symbol.

Two things can happen here. For one, customers who won’t drop a thousand bucks on a phone will go for the iPhone 7. In fact, these phones are currently outselling the iPhone 8 because they are so much cheaper than the iPhone X.

Alternatively, the staunch Apple fans will choose the iPhone X; it is the latest phone. The iPhone 8 doesn’t stand a chance next to this device- and Apple knows it.

The iPhone 8 was created to act as a decoy for both the iPhone 7 and the iPhone X. Ironically, though, there are only a few minor updates the iPhone X has over the iPhone 8.

Looking to buy a new iPhone? Think twice before you make a choice!

Your Turn: Do you think manipulative pricing tactics always work? Share your thoughts with us in the comments!