Mental Accounting
Why people treat money differently based on its source or intended use, and how to apply mental accounting in your marketing strategy.
In this issue
Hey 👋 The Crew here.
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So while you’re tracking ROIs, ROAS, CTRs, and every other acronym under the sun, you might want to track the health of your BACK, too.
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Let’s imagine a nice hypothetical scenario where you find $50 on the sidewalk.
You’d probably blow it on something nice, no second thoughts. A nice dinner maybe. Or a video game, or that makeup set you’ve been eyening.
Now imagine spending the same amount on that same thing, but from the money you’ve earned by working overtime. It hurts more, doesn’t it? You’d rather deposit it into your savings.
That is Mental Accounting.
First developed by Nobel laureate Richard Thaler, this concept suggests we treat money differently depending on where we got it, or what we intended to use it for.
Logically, money is fungible. A dollar is a dollar. But psychologically? We categorize funds into different mental jars, like “rent,” “savings,” or “fun money.”
And we hate dipping into the wrong jar.
Your task as a marketer is to get your shoppers to dip into the right one and spend it.
Three ways to leverage Mental Accounting
Leverage gift cards as fun money
Discounts and promotions are nice, but are still in the same mental bucket. In other words, the pain of paying is reduced, but still present.
Gift cards do something else. They make the pain go away entirely.
Consumers mentally separate gift card funds into a hedonic “play money” account, detached from everyday finances. It makes them indulge into spending and spending higher.
One word: Starbucks.
A gift card here feels like guilt-free splurge cash for lattes, unlike dipping into personal savings.
Did you know: Starbucks has over $1.7B in unredeemed gift cards. Most owners will probably never claim them, making gift cards an unexpected cash flow source for the company. Hm…
Bundle the pain, separate the joy
So if we feel the pain of paying… then multiple payments feel like multiple jabs, right?
Exactly. So if you have add-ons, bundle them into one total price so the customer only has to open their wallet once. However, if you have benefits, separate them.
We can call this integrating pain versus segregating gains to amplify perceived value.
Car dealerships master this: quote a single price for options like wheels and seats, which is one wallet hit, then list each feature individually as bonuses.
Most modern subscription businesses do this, too. Peloton will charge you a big, upfront payment for a bike. One psychological ouch.
But the value is then drip-fed into a dozen wins: daily live classes, leaderboards, themed rides, personalized workouts, and more.
Turn payments into ritualized commitments
Payments sting less when they’re tied to identity. We can call it the identity bucket.
And that’s especially if they feel like part of a ritual you do for a better version of yourself.
Payments tied to purposeful identity buckets feel less painful.
Think of Calm’s annual subscription pitch:
They don’t sell meditation minutes. Or content. Their copy subtly nudges you into a new mental bucket: get back to living, fall asleep naturally, navigate life with resilience.
Suddenly €70 a year doesn’t feel like an expense but more like a personal pact. A symbolic gesture toward being someone who takes their mental health seriously.
This reframes the cost away from a pure financial bucket into an identity bucket.
It’s also why other brands like Patreon, Duolingo Plus, and fitness apps brand payments as self-investment instead of consumption. And you can do it too, no matter your industry.
AI EDUCATION: ChatGPT, Claude, Gemini, Midjourney… So many names, but what’s actually useful for you in your work? There’s a newsletter called The Deep View that exists to sift through all the noise and get you up to speed on what’s actionable with AI products, and it’s free. Join 512,000+ subscribers with one click and let AI empower you.*
AI TACTICS: Struggling to find a practical use for AI in your marketing work? No worries. Every Saturday, we will send you a free newsletter to sharpen your marketing skills and get more wins for yourself and your clients, including the latest AI use cases with actual examples and prompts you can just swipe. Subscribe for free.*
MARKETING:It’s not always the pitch. If you want to close more sales, you have to talk in a louder voice, apparently. New research suggests that a new customer is almost 8% more likely to buy if you’re using an energetic, vibrant tone. Something to consider for your copy, too.
CHATGPT:Ads are coming. OpenAI is apparently testing ads in ChatGPT, and leaked code from the Android beta reveals features could debut as early as 2026. The chatbot processes 2.5B prompts daily and this data abundance could pose a serious challenge to Google. Hm.
AI MARKETING:Shopping is taking the AI route. AI-driven traffic to retail sites leaped 805% year-over-year on Black Friday, hitting a record $44.2B. Shoppers who clicked through from AI services were 38% more likely to make a purchase. Yep, time to optimize for robots…
YOUTUBE:The platform is being accused of serving toddlers with low-effort, AI-generated videos–AI slop for babies. This raises concerns about the overall quality of content being uploaded to the platform and YouTube’s process of regulating it. Could this break trust?
ICYMI, last time we looked at the Future Lock-In.
The “Buckets fo budgets” Crew
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