Back to Top

Psychology of Consumption

Updated 16 December 2019

Psychology Of Consumption

Previously, I wrote about the Psychology of Selling where we saw how certain psychological triggers can help you get customers to say yes to what you’re asking. Focusing on how human psychology plays an important role to optimize your sales or marketing strategies. 

Moving on the same track, in this article, we’ll see what is the Psychology of Consumption.

Psychology of Consumption

The Psychology of Consumption is an essential notion that looks at not only selling a product/service but also, how the after-purchase consumption rate is important in guaranteeing repeat purchases. 

Being in the business of retailing, it’s quite obvious that the competition rate for almost every product and service is lifting gradually. On behalf of that, merchants need to aim for the key to long-term success and not just focus on securing an initial purchase.

And what’s the key to long-term success? – Ensuring people actually use the product and services they buy. This is because if the consumer consumes the product wholeheartedly, he is more likely to repurchase it.

Start your headless eCommerce
Find out More

The psychology of consumption seems altered by two main factors, i.e., the price and payment method.

Linking Price with Consumption

Let’s understand this with an example:

A gym club offers it’s customers the option of paying for the gym membership monthly or annually. Whilst paying annually will help to reduce the pain of paying as one might not like to pay money in chunks but rather prefer to do one smooth transaction that they know will last them for a whole year. But this reduces the service consumption from consumer end as well as reduce the chance of them renewing the membership at the end of the year.

Let’s see why…

It is shown by research that people are likely to highly utilize the service for the first few months because they have that costing factor fresh in their minds. They feel like they have paid for it so they must consume it to every single penny they came.
But as time pass by, that costing factor somehow fades away. The motivation reduces as the money factor is no longer in their heads. Thus, they are not likely to renew their membership at the end of a year as the consumption rate has been reduced from their end.

Moreover, if one goes for the monthly membership payment plan, they are constantly reminded of how much it is costing them. Thus, making them feel the need to get her money’s worth throughout the year and work out more regularly. Hence, it increases the rate of consumption and urges them to continue for a longer-term.

This is known as the sunk-cost effect. Consumers feel constrained to consume the products they’ve paid for to evade the feeling of their money being wasted.

Sunk-cost Effect
Graphical representation of the above example

Another aspect that connects to this psychology is timing. It is seen that many merchants follow the algorithm of ‘buy now, pay later’ to gain popularity and initial growth. But this might cause a countereffect for the long-term approach. 

Payments that occur at or around the time of consumption of the product increases the suck-cost effect. On the other hand, if the payment is made earlier or after the time of consumption tends to reduce the attention towards the cost of payment.

Product Bundling

As retailers, you might have heard that bundling products are a good way to increase the demand for products and services. No doubt it is. But, this method only affects short-term demand. Hence, this might not help you to keep your consumers committed for a long-term scenario.

Price bundling can control the product/service consumption considerably. It is easier to remember the cost of an individual product in an unbundled purchase than within a bundled purchase. Thus, the unbundled purchase makes the cost of that item obvious, creating a strong sunk-cost effect and hiking the rate of consumption.

Linking Payment Method with Consumption

A cash payment feels different than a card payment. Figuring out currency and receiving change make a buyer very aware of the cost of purchase.

There is no doubt that people are more likely to remember the cost of products if they pay via cash than if they pay via credit/debit cards. Resulting in a feeling of pressure to consume products if they paid via cash causing the sunk-cost effect.

What if you want to reassure the initial purchase as well as penetrate the psychology of consumption?

Strategies like annual payment methods, online card transactions & product bundling are done to reduce the pain of paying and also, to increase initial sales.
You can still go with these but to tap the psychology of consumption, make some alterations. Steps like sending regular emails to remind your customers that ‘their membership payment of so-so amount has been started’ or simply emails to remind them of the cost of payment. Or email like how much each item in their bundle cost them individually. This will enhance the suck-cost effect & result in enlarged consumption & retention rate.


Strategizing on how to get customers to buy your products and services is not all. If you wish to build long-term relationships with customers, make sure they actually use your product & return back to it. I hope the above-stated lines might have helped you to get a bit closer to achieving this.

Need Help?

Drop your query at [email protected] or raise a ticket at Webkul UV Desk.

Until next time. 👋

. . .

Leave a Comment

Your email address will not be published. Required fields are marked*

Be the first to comment.

Back to Top

Message Sent!

If you have more details or questions, you can reply to the received confirmation email.

Back to Home