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Ever heard of the “decoy effect?” Even if you haven’t you may have fallen for it, and not known.

It’s most prevalent in the labyrinth we deal with whenever we ponder a mobile phone plan or buy a handset.

Most people go into a state of bewilderment when they start thinking about phone plans.

It’s about as headache inducing as reading the terms and conditions on a software licence.

What happens is that mobile phone companies take advantage of us “glazing over” and play games with our heads – almost always to their advantage.

So, what is the “decoy effect?”  It’s a pricing method which subtly – or perhaps not so subtly once you understand it – forces customer choice.

Example. You are offered one mobile phone plan at a slightly lower price but with much lower value. The alternative is a slightly higher quality product, but it’s at a much higher price.

Steve Jobs at Apple was an acknowledged master, and the company he founded still pursues decoy marketing relentlessly, balancing the ideas of “compromise” and “attraction” in our heads as if we are a psychology experiment.

Case in point: Two models of the iPhone 6s. One with 32GB for $929, the other with 128GB for $1079.

Not that much of a price difference, so you may as well buy the more expensive one, right?

This is exactly what they want you to think, but in reality why not go for the cheaper one? Do you really need 128GB?

What they really want is for you to buy the 128GB, and price the cheaper option close enough to it so you think you’re getting a bargain.

Apple aren’t the only ones. Mobile phone companies do the same thing with their phone plans, especially those which include data.

One plan might be $80 with 10GB of data, lets call that A, and you are weighing that up with another plan with is $60 for 3.5GB. Let’s call that B.

What they want you to think is: “For only $20 more I can get all that data.”

If you catch yourself thinking like this, do the sums. They probably want to lock you in for a 12 or 24 month contract period, so that’s another $240 a year you are paying for the increased data.

Think about that, and then think about whether you really need all that data anyway.

The reality is that most of us don’t really monitor how much data we use and think we need more than we do. The average per user in Australia is under 2GB per month.

In some cases, there is a third option – which is where “decoy marketing” gets its name. In this situation you are tossing up two choices, and then a third is introduced – call it C – which is more expensive that both, but doesn’t deliver as much storage.

In this situation, many people are then led back to Option A, which was the original expensive option and the one the retailer wanted you to buy all along.

So, next time you go phone shopping, keep all this in the back of your mind and don’t get yourself outsmarted.

If you really want that phone and want that data, go for it. But maybe you’re just being duped by the decoy.

Phone Plans. Five Things to Remember

– More data is not necessarily better

– If there are two options, the cheaper one is probably best

– Be wary of plans which include phones

– Be wary of plans – all plans!

– Pre-paid is not for losers. It is for people who are smart with their money