How does it feel to pay your power bill, see your favorite concert / ball game, or buy new shoes? If you think about it, the emotions related to those purchases are varied, even if the amount of money used may be similar. Behavioral economists describe this as the ‘pain of paying’, and it’s related just as much to what you’re buying as it is to how you’re paying. For example, in his book Predictably Irrational, Dan Ariely experimented with students.
Pay as you go
Instead of paying for their pizza per slice, or contributing equally for the whole thing, he made them pay for every bite of pizza they ate. This way, they paid less, but they enjoyed the experience far less, because they could literally taste the price of every mouthful. By contrast, a cruise may use the opposite approach, because customers pay for everything at the beginning. It’s an all-expenses-package booked weeks ahead of time, so passengers can focus on enjoyment without thinking about the money. Paying at the end of the holiday (or expensive meal) takes some of the joy away. It might be why fast food feels more enjoyable than fine dining. It’s quicker, greasier, cheaper, and more filling, but also, you pay before you eat, not after. Another interesting aspect – buying things for someone you care about seems to be less painful than buying the same thing for yourself, regardless of the price.
Time matters too
Even sending someone to buy something for you, using your money, can lessen the pain of paying. Along the same lines, most people prefer a single overall price instead of a ‘base price’ with ‘taxes, commissions, levies, and tips’ added after the fact. Still, the biggest pain point is mode of payment. Hard cash hurts the most, because it’s tangible. You start off with crisp notes or jingling coins. You can literally feel their comforting bulk and texture.
After your purchase, your purse is lighter and your wallet is thinner, so you feel the pain immediately. Debit cards hurt a little less, but you can still ‘see’ the cash leaving your account, because it shows your before-and-after bank balances. With credit cards, you don’t feel an instant loss, because your card looks and feels the same, and you don’t see the actual figures involved until you check your statement in a month. It makes you spend more, and if you let them use credit cards, your customers will spend more at your store, too!
For more information on how accepting credit cards can boost sales, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.