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Have you heard of ‘Good Better Best’ pricing? It’s the idea that you should never just offer a product in one price range. You should offer 3 versions: the good, the better and (wait for it…) the best.

Why? Because marketing research has shown that, when confronted with 3 choices, consumers have a tendency to gravitate towards the ‘compromise’, or middle choice. They don’t want to settle for the good version, and they don’t want to splurge on the best version. So they select the better version.

It might not be surprising to learn that retailers know all about this, and play off it masterfully. Wal-Mart in particular. You can draw people into the stores with a loss-leader, an item at a great price which gets the consumer’s attention. But when they get to the store, they discover that there are better products out there, for just a bit more money. And they tend to upgrade rather than buy the cheap version.

Now, guess which of the 3 versions carries the best margins for the seller? Think about some ways you can integrate this very effective, tried-and-true pricing strategy into your company.