Home > Uncategorized > Why We Pay More to do More Work: the IKEA Effect in Marketing

Why We Pay More to do More Work: the IKEA Effect in Marketing

How important is it to you to feel like your opinion matters when you buy something? Recently, companies have become popular for their “one-of-a-kind” products that the customer designs themself. People want to buy products that they can take responsibility for, and the IKEA Effect shows that they will pay more for them. The IKEA Effect is a cognitive bias that makes people overestimate the value of items that they themselves have built or added to. Take Build-A-Bear Workshop for example, they market a mildly creepy frog for $22 (already absurd), but the second you cut it open, put a heart in it, and give it clothing that you get to choose yourself, that same frog costs you $45. Yet, people keep paying for it, and you can find a Build-A-Bear-Workshop in every state other than Wyoming, Alaska, Hawaii, and North Dakota (according to a blurry map on the Build-A-Bear Website). This same effect has been noted in products bought from IKEA, a popular Swedish store that specializes in furniture that the buyer must, in part, build themself. This study showed that people who bought and assembled IKEA products were willing to pay more for their own furniture than other similar products. Although not seemingly very important, the IKEA Effect can make you question why you’re willing to pay so much for certain products.

Rupert the Build-A-Bear frog pictured in cottagecore attire featured on a Pinterest board dedicated to “cottagecore Build-A-Bear aesthetic”.
Eve. “Rupert the Frog.” Pinterest, https://www.pinterest.com/pin/613756255468480964/.
Spring Green Frog listed on the Build-A-Bear website for $22.
“Spring Green Frog: Build-A-Bear Workshop.” Build, https://www.buildabear.com/spring-green-frog/028216.html.

So, how does the IKEA Effect work? It seems obvious that we would prefer things we have spent time on because otherwise spending time on them is just counterproductive. However, why do we value these items that we “contribute to” more than the same items but without our contributions? You could get a pair of sneakers from Nike for $100, but if you want to customize the same pair, they are all of a sudden $150. It is entirely illogical that it would cost Nike $50 to make this one small change to their sneaker, and they are not actually “better” in terms of their function, so what makes us value items we have contributed to so much more? One theory that we will touch on for how the IKEA Effect works connects to Effort Justification. Effort Justification is a cognitive bias that we have that affects how we view items, experiences, etc. that we have put a lot of time or effort into. For example, research on rookie athletes showed that after having gotten through the hazing experience, they excused the practice of hazing and even said that it was a necessary “rite of passage”. If you’re curious about the strong influence on effort justification, you can read more here. Effort justification is assumed to be so influential because if we do not value the result of a difficult task, it can create cognitive dissonance. Cognitive dissonance is a feeling we get when what we are doing does not align with our values, and it creates a tension in ourselves that we refer to as dissonance. Connecting this to the IKEA Effect, people will value something more if they spent their own personal time and effort on it because otherwise, that could create dissonance. To fix this dissonance, we value the item more in order to make it worth it. We have already wasted the time, so the only way to avoid cognitive dissonance is to value the item higher.

The inside of Converse’s new in-store customization “Blank Canvas” store (left) and some of the decor they have inside of it (right). “Behind the Scenes at Converse’s in-Store ‘Blank Canvas’ Customization Shop.” Digiday, 19 Feb. 2016, https://digiday.com/marketing/behind-scenes-converses-store-blank-canvas-customization-shop/.
Www.basellers.com, https://www.basellers.com/?category_id=7798896.

Now you know how it works, but what does it really matter if we prefer one product to another? The key to the IKEA Effect is how it can be used to influence what you buy and what you pay for it. The sale of customizable products can be beneficial for both sellers and buyers. For buyers, they get to customize a product they enjoy which can boost self-esteem. Designing a product yourself can boost self-esteem because of something called self-efficacy. By designing the product yourself, you’re showing your brain that you’re capable of making something that you like. This boosts your self-esteem. Buyers also get exactly what they want from a product instead of having to settle for what the company itself has made. For sellers, they get to charge higher prices for a product that costs them pretty much the same to make. For example, IKEA gets to avoid high costs on assembly and shipping of larger items. Nike, as another example, can charge an extra $50 for a product that costs them minimally more to actually produce. One example of the IKEA Effect in marketing is the sale of Betty Crocker cake batter. Betty Crocker saw a dip in its box cake mix sales when it started selling completely ready-made cake batter. To make a cake from this product, people pretty much just had to put it in a pan. As Betty Crocker soon realized, people did not want simplicity, they wanted to be part of the experience. To solve this problem, Betty Crocker removed the egg from the ready-made batter which allowed people to add the egg back themselves when they made the cake. The single contribution of the egg made people want the product more, and Betty Crocker profited a lot more from this small change (if you want specifics, more about this, you can click here). Another example is meal-kit delivery services. These services have become quite popular in recent years. In these kits, people get all of the ingredients they need to make a homemade meal. The appeal of this, of course, is the making the meal oneself (and contributing to the final product). Instead of paying to own a venue and employing people to cook, the creators of these companies like HelloFresh just have to buy the ingredients. On the other hand, the people who buy these kits get the experience and self-esteem boost of cooking themselves a meal. 

The contents of a HelloFresh meal kit box.
“Everything You Need to Know about Meal Kits.” HelloFresh, https://www.hellofresh.com/food-guide/meal-kits.

Unfortunately, the IKEA Effect is not always mutually beneficial to consumers and sellers. As we discussed, in the case of companies that abuse the IKEA Effect to overcharge buyers, the self-esteem boost and individuality of products may not outweigh the price. In a study conducted on cardboard boxes, participants who built their own boxes were willing to pay $0.30 more than participants who had not built the box. While 30 cents may not be much, imagine how much more it could be if it was a product one hundred times the price! Ridiculous!

Companies can use people’s tendency to value products that they contribute to higher to increase sales and charge customers more. HelloFresh, IKEA, and Build-A-Bear have used this tendency to build entire markets around products that consumers build themselves. Alternatively, companies like Converse and Betty Crocker have seen the market around customization and added that aspect to their own products to increase sales. Clearly, the IKEA Effect can be incredibly impactful in the marketing and design of a product. So, why should you care? If you’re involved in design and sales, consider the IKEA Effect in future design work and sales strategies. If you’re not, consider how the IKEA Effect could be changing how you value a product. Is it actually worth the price increase, or do you just like it because you can tell your friends you made it yourself? Don’t forget the IKEA Effect when you find yourself dropping $15 on a cashmere sweater for your stuffed frog.

“Behind the Scenes at Converse’s in-Store ‘Blank Canvas’ Customization Shop.” Digiday, 19 Feb. 2016, https://digiday.com/marketing/behind-scenes-converses-store-blank-canvas-customization-shop/.

Eve. “Rupert the Frog.” Pinterest, https://www.pinterest.com/pin/613756255468480964/.

“Everything You Need to Know about Meal Kits.” HelloFresh, https://www.hellofresh.com/food-guide/meal-kits.

Exploring Ikea Effect in Self-Expressive Mass Customization. https://www.researchgate.net/profile/I-Ling-Ling/publication/339197928_Exploring_IKEA_effect_in_self-expressive_mass_customization_underlying_mechanism_and_boundary_conditions/links/5e7002afa6fdccc06e949bca/Exploring-IKEA-effect-in-self-expressive-mass-customization-underlying-mechanism-and-boundary-conditions.pdf.

Gearon, Michael. “Cognitive Biases - the IKEA Effect.” Medium, Medium, 1 May 2019, https://michaelgearon.medium.com/cognitive-biases-the-ikea-effect-d994ea6a28ad.

“Ikea Effect.” The Decision Lab, https://thedecisionlab.com/biases/ikea-effect.

Maich, Kristin H.G. “Reducing Cognitive Dissonance through Effort Justification: Evidence from Past Studies and Daily Experience.” Western Undergraduate Psychology Journal, 3 Jan. 2014, https://ojs.lib.uwo.ca/index.php/wupj/article/view/1659. 

Professor of Marketing and Consumer Behaviour Gary Mortimer et al. “The IKEA Effect: How We Value the Fruits of Our Labour over Instant Gratification.” The Conversation, 6 Apr. 2022, https://theconversation.com/the-ikea-effect-how-we-value-the-fruits-of-our-labour-over-instant-gratification-113647. 

Norton, Michael I, et al. The “Ikea Effect”: When Labor Leads to Love – Harvard Business School. https://www.hbs.edu/ris/Publication%20Files/11-091.pdf. 

“Self-Crafting Vegetable Snacks: Testing the IKEA-Effect in Children.” British Food Journal, https://www.emerald.com/insight/content/doi/10.1108/BFJ-09-2016-0443/full/html.

“Spring Green Frog: Build-A-Bear Workshop.” Build, https://www.buildabear.com/spring-green-frog/028216.html.

Vuculescu, Oana, et al. “The IKEA-Effect in Collective Problem Solving.” Academy of Management Proceedings, 9 July 2018, https://journals.aom.org/doi/abs/10.5465/AMBPP.2018.16816abstract.

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