Raise your hand if you’ve ever been to a restaurant and seen a steak on the menu for $65 and thought, “That’s way too expensive. I’d never buy that.”
Now, raise your hand if you’ve ever ordered the other steak on the menu for $47 because it wasn’t the most expensive thing on the menu.
What persuaded you to choose the $47 steak? Decoy pricing.
The idea is that if the restaurant wants to sell a lot of its $47 steaks (maybe because they’ve got a really great profit margin on that cut of meat) they add a less appealing option alongside it to make the $47 steak look better. Perhaps they even make sure that the $65 steak is only 8 oz and the $47 steak is 14 oz. just to make sure you lean that direction.
Think of it this way… what if the $47 steak was the most expensive thing on the menu? Would you more likely to order it or the $39 dish? What is $39 was the highest priced dish on the menu?
So how do you get more people to buy the $47 steak? Add a higher priced item to the menu.
You can use this same pricing strategy in your event rental business as well.
Let’s say there is a particular dining table you want to highlight in your collection or steer your clients towards, make sure that’s the dominant choice. Add a decoy to make sure they see the value they get with that first option.
If you want to rent your Helmer Farm Tables for $100 each, consider offering another dining table option for $125. Maybe that other option is even an inferior one (seats fewer people, harder to transport, less unique wood, etc.). Using the decoy elevates the Helmer Farm Table and makes $100 look like a real steal.
Remember when you do this, the strategy is to rent the heck out of that Helmer Table. Your $125 table isn’t going to be flying off the shelves— but that’s the whole point (you won’t need as many of them so be sure you strategize your inventory buying accordingly). If you keep that objective in mind, decoy pricing can help you meet your revenue goals.
