Decoy pricing is a marketing strategy where a company offers a third option to make one of the other two choices more appealing. This third option, known as the "decoy," is typically priced in a way that highlights the value of the more expensive option. For example, if a coffee shop offers a small coffee for $2 and a large coffee for $4, adding a medium coffee for $3.50 can make the large coffee seem like a better deal. This technique works by influencing consumer perception and decision-making. When faced with three options, customers often compare them, leading them to choose the more expensive option that appears to offer better value. Decoy pricing is commonly used in various industries, including retail and subscription services, to drive sales and increase profits.