4 Clever Ways to Reduce Your Customers’ Pain of Paying According to Psychology

Lower customers' pain of paying via consumer psychology

There’s one thing that all of us do every day that no-one enjoys. In fact, it’s fair to say people hate it. What is it? Paying! It hurts us almost like physical pain. But what if we could show you how to reduce that pain? What could that mean for your business?

In this article, you’ll find out:

  • The best way for customers to feel less pain when paying for your products,
  • How paying in advance can reduce your customers’ pain and increase your sales,
  • How leveraging the power of free can help your business,
  • What the “left-digit effect” is and how can it help you set more effective prices.
Welcome to InsideBE

InsideBE is the largest behavioral economics and consumer psychology hub for marketers, sales people, and business professionals alike.

About us

Every small business owner wants to succeed and make a profit. But not everyone understands just how important the way that they pay for products is to customers.

There really is science behind paying, and that science tells us that spending money can cause people real pain. We ignore at our peril what is happening in customers' minds when they reach for their wallets and swipe their credit cards. The good news is there's a way to ensure that your customers don’t have such a terrible experience when they’re buying from you.

And if you still think that it sounds crazy that paying for something can create the same feeling as actual physical pain, stay tuned to learn more.

Payment hurts physically

Remember the last time you were in a grocery store or shopping mall and you paid for something? When you were pulling out your wallet and handing over the cash or card to the vendor, how did you feel? When we mentioned that paying can cause real physical pain we meant it literally.

Researchers Brian Knutson and Roger Lowenstein and their collaborators discovered that the pain of paying shows up in the brain. The results of their study suggest that when we encounter excessive prices, the so-called insula shows increased activation before a purchase decision. This part of the brain is associated with experiencing negative emotions and physical pain. Another study documented that the pain centers of the brain activated when experimental subjects saw prices - particularly prices that were too high.

A mental feeling like this is known as The Pain of Paying. It was coined twenty years ago by the consumer psychologist Ofer Zellermayer and his colleague George Loewenstein. This term simply refers to the negative emotions experienced during the process of paying for goods or services. We lose money when we pay, and as most people are loss averse, they experience a negative feeling that can translate into spending less and buying less.

Those seem like they could be valuable lessons for your business, don't they? Now, let’s dig deeper into some more sophisticated strategies on how to soften the pain of paying.

1. Pay in advance

One of the lessons that have been learned is that paying that first dollar hurts the most and every additional dollar hurts less and less

Let's imagine this principle in the following example. Maybe a lot of you have paid a visit to an “all you can eat” restaurant - a restaurant where you pay a fixed amount, load your own food, and eat as much as you want. You feel the worst pain in the beginning, but then it's over. You fill up your plate to the brim and enjoy your meal.

Compare that to the menus where every item has its own price and you have to calculate in your mind how much your dinner with your boyfriend or husband will cost.

One of the lessons that have been learned is that paying that first dollar hurts the most and every additional dollar hurts less and less.

This is also backed by science. Loewenstein and Prelec found in their landmark study that consumption that has already been paid for can be enjoyed as if it were free and that “the pain associated with payments made prior to consumption (but not after) is buffered by thoughts of the benefits that the payments will finance.” They called this phenomenon “prospective accounting”.

The most important fact is that it´s applicable in all sorts of businesses. Let's take the holiday industry. A pre-paid all-inclusive holiday will be more enjoyable if the pain comes at the start, and afterwards you don't have to check the prices on the restaurant menu all the time. Imagine waking up every day with the feeling that you need to keep track of all the different prices you’ll have to pay for drinks at the beach bar. God, no, it hurts!

2. Sell in bundles or packages

Damn, this article is locked.
No problem!

Unlock Instantly