Encourage Customers To Buy The Variation You Want By Making Other Variations Less Attractive

Let's say you are selling Apple Cider Vinegar Gummies. For whatever reason, your highest ROI/Margin on the gummies is a bottle of 100 gummies. We can use this to our advantage by making variation sizes that are much less attractive than our bottle of 100 gummies.

For example:

We sell 3 types of Gummies:

• Bottle A – 60 Gummies
• Bottle B – 100 Gummies
• Bottle C – 140 Gummies

We set the prices as follows:

• Bottle A: $16.99
• Bottle B: $19.99
• Bottle C: $39.99

That way the customer is incentivized to buy the bottle we want them to buy (Bottle B – 100 gummies) because it is the best "deal."

BONUS Hack from Kevin King:

Make the quantity in the variation easily divisible by the price.

For example:

We sell 3 types of Water Filters:

• Pack A – 10 Water Filters
• Pack B – 15 Water Filters
• Pack C – 25 Water Filters

If we make the price easily divisible by the amount in the pack, our sales will increase. So, we set the prices as follows:

• Pack A – $50 ($5 per filter)
• Pack B – $60 ($4 per filter)
• Pack C – $75 ($3 per filter)

The Psychology Behind Decoy Pricing on Amazon

What you are doing with variation pricing is called the "decoy effect," a well-documented pricing strategy used by everyone from movie theaters to SaaS companies. The idea is to make one option clearly the best deal by comparison.

Here is how to implement it on Amazon effectively:

• Your target variation (the one with the best margin) should look like the obvious best value. Price it so the per-unit cost is lowest.
• The small variation should be priced high on a per-unit basis. This makes the medium option look like a bargain by comparison.
• The large variation should be priced only slightly better per-unit than the small. This makes the medium option look like the sweet spot.

Real example with coffee pods: 20-pack at $12.99 ($0.65/pod), 40-pack at $19.99 ($0.50/pod) as your target, and 60-pack at $34.99 ($0.58/pod). The 40-pack is clearly the best deal per pod. The 60-pack exists primarily to make the 40-pack look smart. You can steer 60-70% of your sales to your highest-margin variation using this structure.

Frequently Asked Questions

What is the decoy effect in Amazon product pricing?

The decoy effect is a pricing strategy where you add a less attractive option to make your preferred option look like the best value. On Amazon, this is done through variation pricing, creating size or quantity options where one clearly stands out.

How many variations should an Amazon listing have?

Three variations is the sweet spot. Fewer than three does not create enough contrast for the decoy effect. More than five overwhelms shoppers. Use three options: a small/expensive option, your target option, and a large/less-efficient option.

Does variation pricing really affect which Amazon product option customers choose?

Yes. Studies show that 60-70% of customers choose the middle option when three choices are presented with strategic pricing. Without the decoy, customers split more evenly or default to the cheapest option.