Well it's the timing of the payment actually matters,
if you think about how much you are going to enjoy the vacation.
If you decide that you want to pay before your vacation,
the pain of paying is being separated from the consumption experience.
Because you have already paid ahead, and
you don't get to think about each single transaction during your vacation.
Now, if you would like to pay after your vacation, think about what can happen
psychologically, even though this makes perfect economic sense.
You don't pay for your vacation until you have evaluated the service you have
received until you have evaluated our own experience.
But when you pay after your vacation the actual pain of paying is going to
interfere with your enjoyment of your vacation.
Because you are going to think about each activity,
each meal in terms of how much it costs you.
It's taking the pleasure away from your next big vacation.
So the takeaway here is that you want to think about how to maximally
maximize the psychological benefit for any consumption experience.
And you want to make sure consumers can pay ahead of time, so
that they get to enjoy the experience to the maximal level.
Now, if we are going with this way,
you need to manage this sticker shock at the moment of consideration.
How do you justify consumers to pay before their consumption,
and how do you justify that big amount?
So I'm going to recommend that you can use the “pennies-
a-day” strategy prior to the purchase.
In the case of considering of the refrigerator,
on the $2,000 refrigerator may look really expensive.
But if you can break down the cost in terms of daily use,
that actually only comes to $5 a day for an entire year.
So when you can break it down in terms of more manageable terms,
consumers are going to have an easier time relay to the payment.
And it's easier for them to justify,
when they are considering making their next big purchase.
Other ways that you can separate the pain of paying from the consumption experience,
is to aggregate or to lump the payments together.
So credit card is the perfect example that aggregates payment together.
Because you're no longer thinking about each single transaction anymore,
and if we have learn anything from mental accounting.
When multiple losses are mentally coded as one single loss,
you tend to experience less negative emotion overall than if you
want to experience each of those negative episodes on its own.
So overall when you can lump all the payments together consumers are going
to feel much less of those pain of paying.
So the similar example would be to use a flat rate fee structure for
shipping so the consumers don't have to think about paying for
shipping for each of their single orders.