Using the Goldilocks Trick to Frame Your Prices

I was looking at houses, and my real estate agent, Clive, had a strange itinerary for me. “Why does he want to show me properties I’m not even interested in?” I asked my assistant. He was insistent that I see a variety of options, even ones that seemed like a bad fit. A few days later, I made an offer on the second of the three properties he showed me. This is a vital lesson for anyone with a or who is .

It wasn't until months later, while digging into the psychological tricks that marketers use, that I figured out what happened. I stumbled upon something called the Goldilocks effect, and Clive’s entire strategy clicked into place.

The Psychology of 'Just Right'

The Goldilocks effect is a type of “anchoring,” which is a cognitive bias where we rely too heavily on the first piece of information offered when making decisions. When a seller presents two extreme options alongside the one they actually want you to buy, the middle option suddenly looks much more reasonable.

Most of the time, the “true” value of something is just an opinion. So, we search our environment for clues to help us decide. The Goldilocks effect provides those clues. We see the most expensive option as an over-the-top luxury and the cheapest one as risky or low-quality. The one in the middle feels like a safe bet—cost-efficient, good quality, and the perfect balance. This is a foundational .

Thinking back, I had only asked Clive to see that second property. He’s the one who insisted on showing me three. The first was way too small and overpriced. The second was spacious and just a bit more expensive. The third was in the same neighborhood but seemed absurdly overpriced. Like a puppet, I went right for the second one.

I had to know if he did it on purpose, so I texted him about the Goldilocks effect. He replied with a winking emoji and said, “Never show people only one option!”

It Works for More Than Just Houses

Clive isn't the only one using this powerful tactic. In 1992, Panasonic wanted to sell more of its $179.99 microwave. So, they introduced a premium $199.99 model and kept their existing $109.99 one. Suddenly, the $179.99 unit became the mid-priced option, and its sales skyrocketed, pushing Panasonic’s market share to 60%.

Another experiment highlights this perfectly. When people were asked to choose between an all-inclusive trip to Paris or Rome, Paris won. But when a third option was added—a trip to Rome that was all-inclusive for coffee—the original all-inclusive Rome trip suddenly became the most popular choice, even beating Paris. The slightly worse Rome option provided a context clue, suggesting the main Rome deal was so valuable that something had to be removed.

To make this work for your own , you price the middle option closer to the low end than the high end. For example, an airline might price flights to New York at $800 for economy, $2,000 for business, and $8,000 for first class. Many people will see the $2,000 ticket as the best value, even though it’s far from the cheapest price.

Why This Isn't Deceptive

We like to believe we’re rational, but our decisions are often driven by social cues, irrational fears, and gut instincts. When creating a or an , many people focus on improving the reality of their product instead of leveraging the psychology of perception.

Great marketers understand this isn't about being unethical. The same psychological forces can work against you, creating unfair perceptions of your work. It’s only fair that you get to use those same forces to your advantage, helping the world see the true value of what you’ve built. This is how you can turn a .

The rule is simple: people make value judgments based on context. By offering a range of options—like an economy, standard, and premium version of your product—you can tell a story that changes a potential customer’s perception. You're not changing the price; you're changing the context. And the context creates the value.