Pricing
Tactic
Encourage Customers to Budget Early
Early budgeting pushes you further away from this initial money, reducing the pain of paying from these funds.
Overview
Budgeting is good, right?
Not always. Sometimes it increases spending.
Why? Once you designate funds for a future purchase, you start moving further away from these funds. Your attachment gradually weakens.
In one study, students who budgeted early for a class ring spent more money because they psychologically separated themselves from these funds (Chloe & Kan, 2021).
Perhaps hotels and rental car agencies should offer upgrades to customers who make reservations in advance. Or perhaps frugal customers should budget for a vacation in advance to reduce the pain of spending money.
- Choe, Y., & Kan, C. (2021). Budget depreciation: when budgeting early increases spending. Journal of Consumer Research, 47(6), 937-958.