How The Decoy Pricing Calculator Works

💡 This is more of a technical explainer of the math behind the Decoy Pricing Calculator, so this won't deal with what it is - that's all covered in the explainer post.

If you want to know how to use the Decoy Pricing Calculator, here's how to use it. Below is the algorithm for the Decoy Pricing Calculator:

1. Price each package by multiplying work hours by your hourly rate and then adding the cost of materials.
2. After arranging the packages in price ascending order, identify the Target package
3. For the packages next to the Target package, increase their price by multiplying by (1+1/n), where n is the number of packages

This algorithm only kicks in when n>=3, or the number of packages is at least 3. You can't have a decoy package if there are only 2. This algorithm is also limited to 5 packages, as after 5 packages, the decoy effect starts to break down.

To see the Decoy Pricing Calculator in action, check it out here:

Decoy Pricing Calculator | Harmonic Decisions

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