How marketers use mental accounting to shape customer decisions
Understanding mental accounting can empower marketers to influence purchasing decisions by aligning offers, promotions, and pricing structures with the way people naturally organize and perceive their money.
How marketers use mental accounting to shape customer decisions
Every day, people make countless financial decisions—and they often do it irrationally. One key concept that explains this behavior is mental accounting, a term coined by behavioral economist Richard Thaler and explored further in collaboration with psychologist Daniel Kahneman. Mental accounting helps explain why consumers treat money differently depending on where it comes from, where it is kept, or what it’s intended for.
Understanding mental accounting can empower marketers to influence purchasing decisions by aligning offers, promotions, and pricing structures with the way people naturally organize and perceive their money.
The theory behind mental accounting
Mental accounting refers to the way people mentally divide their money into separate “accounts” based on subjective criteria, rather than considering money as completely fungible. For example, someone may budget $50 for entertainment, and if that’s spent, they may feel constrained—even if they have ample funds in other areas of their budget.
Richard Thaler first introduced this idea to show how traditional economic theory fails to capture the psychological nuances of financial behavior. Daniel Kahneman’s work on prospect theory complements this by showing that people assign more emotional weight to perceived gains and losses depending on their context.
This leads to behaviors like:
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Feeling more comfortable spending a $50 gift card than $50 cash
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Refusing to buy a second movie ticket after losing the first, even though the money is already gone
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Splurging from a tax refund but being frugal with their regular paycheck
Mental accounting shows that context matters more than actual monetary value.
Why marketers should care about mental accounting
By recognizing how customers categorize spending, marketers can present offers in ways that match those mental frameworks. This increases the likelihood of purchase and satisfaction.
Practical examples of mental accounting in marketing
1. Coupons and discounts
A coupon feels like “bonus money” from a separate mental account than personal cash. This makes people more likely to use it quickly or spend more than they otherwise would.
Example: Offering a $10 coupon feels like found money and often leads to a higher cart value than a simple $10 price drop.
2. Gift cards and store credit
People are more liberal with spending when using gift cards than when using their own money, even if the amount is the same. They perceive it as a separate, lower-stakes account.
Tip: Position gift cards as rewards, and encourage their use to stimulate premium product purchases.
3. “Free money” framing
Rebates, cash-back offers, and “buy now, save later” tactics capitalize on the idea that savings or extra value are handled in a different mental account than the purchase itself.
Example: “Get $50 back after purchase” makes customers mentally separate the savings from the cost.
4. Budget-based upselling
If a customer has mentally allocated a budget (e.g., $500 for a new phone), offering accessories as “separate” deals taps into a different mental account and makes them more likely to say yes.
Tip: Avoid bundling optional items into the total upfront—offer them as follow-ups.
Conclusion
Mental accounting isn’t just a quirk—it’s a powerful insight into how customers think. Understanding this behavioral pattern allows marketers to tailor offers and experiences in ways that align with how people actually make decisions.
By using concepts from Thaler and Kahneman’s work, marketers can tap into the hidden logic of consumer behavior, improving campaign performance and building smarter pricing strategies.
Want to leverage behavioral economics like mental accounting to drive more sales? Our team of digital marketing experts is here to help you craft strategies that speak the language of your customers’ minds. Reach out today!