Avoid Coupling at All Costs

price psychology Jan 02, 2017

Do you want to streamline getting paid? Then avoid coupling

I’d like to share with you why you should avoid coupling at all costs.

So what does coupling mean? To explain, I’ll need to refer to some research done in 1998 by Prelec and Loewenstein, two behavioural economists. Here are their exact words on what they learned from their study: "Coupling refers to the degree to which consumption calls to mind thoughts of payment and vice versa. Some financing methods, such as credit cards, tend to weaken coupling. Whereas others, such as cash payments, produce much tighter coupling. Sometimes this is referred to as saliency. What it means is that if we can change the way that we take money from the clients, we can reduce the association of payment pain."

Uber leads the way


I can give you a great example of how this works in practice by taking a look at the taxicab industry. I’m sure you’re aware of how it’s been revolutionised in the last few years by Uber.

In the past, you’d jump in a cab – perhaps a black cab in London, or a yellow one in New York – and sit there with no idea what the price was going to be. Then, at the end of the journey, when you got out and were told the final price, you’d take the cash – whether pound notes or dollar bills – out of your pocket and hand it over. That’s a perfect example of coupling. Of how it creates a greater association with pain through you having to physically take money out of your pocket.

In contrast, Uber provide an upfront price that you can pay by credit card. And, as Prelec and Loewenstein showed, when we pay for things by credit cards – because it's a piece of plastic, rather than cash from our pocket – the association with payment pain is less. (Perhaps that explains the huge escalation of credit card debt, too – people are far more willing to spend money using credit cards.) Uber have also got rid of the ticking clock on the meter, which is all part of the saliency. It's a reminder of the payment pain and that's all gone now.


How we can make clients happy to pay, too


What can we learn from this? Well, we need to make sure that when people pay for our accounting, bookkeeping or tax services, we offer methods that reduce the pain association. The worst method then would be a client having to take cash out of their pocket to give to us. Slightly better would be their writing a cheque. But best of all would be letting our clients pay by credit card. 


If you found this advice helpful, then I go into more detail in a video you can watch here





If you found this valuable and would like to learn more about value pricing, I run a free live online training session every month with a topic chosen by you. Attend live and you can ask me any questions you have. Click here to register and I will send you an invitation to the next session.

Wishing you every success on your pricing journey

Mark Wickersham

Chartered Accountant, Public Speaker and Author of Amazon No.1 Best Seller “Effective Pricing for Accountants”