How the IKEA effect makes people pay for more than needed
What is virtual ownership?
This effect explains that people start to feel ownership of a product before they actually own it. The high prices that people are subject to pay during auctions are due to the people’s imagined ownership. Once we place the bid, we often start to fantasize about owning it, and the subsequent bids we place will be higher since we start to value the item more than before.
Why does it happen?
There are three reasons why we do not always think rationally when it comes to our own possessions,
- We tend to focus on what we may lose rather than the possible gain.
- The connection we feel with certain things makes it difficult to dispose of them. Eg. our first car, first bike, etc.
- We assume other people will see the object through our eyes.
People also tend to value items higher when more effort is put in by themselves during creation. This is why people feel their IKEA furniture is of more value since they worked hard in assembling it. This is also called the “Ikea effect”.
How you can implement this effect?
Allow your users to feel the ownership of the product and give them ample time to do so. This can be done with “15-day trials” and “10 days buyback if not satisfied” kind offers to depend on the product.
In e-commerce, while sending out abandoned cart emails, add something like “The product is absolutely yours, just a click away” and emphasize the speed at which the delivery will take place (eg. same-day delivery). Specifying the exact date also will create a more real connection.
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