Let’s say you have a product or service selling for £50 and you don’t think that you can charge more. In that case you can introduce a second product (B) at say £70 with extra bells and whistles. But almost no-one buys it because it’s more expensive. The trick is to introduce an option C, at say £100 with even more additional features BUT make those features irrelevant to most customers. They will have to be genuine advantages just make them things that the average customer won’t value. In this case (and this has been demonstrated several times) people will choose the middle item as it’s cheaper then option C and (as far as they are concerned) better so it’s a bargain. Of course some customers will value the extras on option C and buy it bringing in even more revenue.
In case you think this sounds a bit weird, think about wine lists in restaurants, a lot of people will go for the second cheapest bottle and the restauranteurs know this so it’s often the one with the best % mark up. There are always very expensive bottles too, which firstly make the others look better value and secondly are there to buy if anyone is feeling flush that night. If you don’t make the offer you can’t make the sale.