THE PSYCHOLOGY OF MENTAL ACCOUNTING

Summary from the TLDR Marketing newsletter

Mental accounting describes why we treat money differently based on how we label it. This explains why we tend to spend more when we pay with a credit card instead of cash, as well as why we are willing to purchase currency in video games. Brands can apply this knowledge by offering installment payment options, emphasizing long-term savings in subscription pricing tiers, and enticing customers to return with cash vouchers.