Decoy Effect

Matt Rickard

The Decoy Effect is a cognitive bias that occurs when people are presented with two options, one inferior to the other. The cheap option acts as a decoy, and people are more likely to choose the superior choice if it is presented alongside the low option
SaaS companies sometimes use the decoy effect for pricing plans. You can see this mostly in startups that are still targeting SMBs. Wix has programs that are $16GB "Combo" for 2 GB storage,$ 22 "Unlimited" for 5 GB, $27 "Pro" for 50 GB, and$ 45 "VIP" for 100 GB. For $5 extra, you get ten times the storage between Unlimited and Pro. Their business plans are structured similarly

... to generate money, it's for decoy effect — to encourage networking effects)

- Decoy Effect