3 min read

The IKEA Effect: The Psychology Behind Perceived Value

Published on
January 5, 2024
Phoenix Baker
Product Manager
Lana Steiner
Product Designer
Drew Cano
Frontend Engineer
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There is an amazing psychology behind “the IKEA Effect”, a term coined by researchers Michael I. Norton, Daniel Mochon, and Dan Ariely. Let’s take cake mixes as an example— back in 1929, people only had to add water to the mix and there was really not much to be done. When they removed the egg from the mix and made consumers add water and a couple of eggs themselves, people felt more involved in using the product, hence the increase in its sales.

The IKEA Effect refers to the psychological phenomenon where individuals place a disproportionately high value on products they partially create or assemble themselves. This effect has become synonymous with the experience of assembling furniture from the Swedish retail giant, IKEA. Let's delve into the psychology behind the IKEA Effect and why the act of self-assembly enhances the perceived value of products.

Investment of Effort

The fundamental principle behind the IKEA Effect is the investment of effort. A lot of iPhone users would more likely buy a MacBook and an Apple Watch as well, even if there are other products or brands that would fit their preferences. These users are already invested in the brand or product. It could be the same feeling as when you find it hard to switch jobs or companies, or to switch from Android to iOS. When individuals spend time and energy assembling something, they develop a sense of ownership and attachment to the finished product. The effort expended in the assembly process becomes a psychological investment, leading to an increased sense of value.

Sense of Accomplishment

Have you ever assembled furniture from a flat-pack following a set of instructions, handling various components, and overcoming challenges along the way? You’ve probably felt a tangible sense of accomplishment completing this task. When a product user transforms from a passive consumer to an active contributor in the creation of the final product, this gives them a heightened sense of achievement and it contributes significantly to the perceived value of the assembled item.

Personalization and Customization

The act of self-assembly also allows for a degree of personalization. While following the provided instructions, individuals may make small decisions or adjustments, adding a touch of their preferences to the final product. This customization fosters a sense of uniqueness, aligning the item more closely with the individual's tastes and needs. The feeling of having a personalized item further enhances its perceived value.

Reducing Cognitive Dissonance

After buying a product, we always have this post-purchase behavior that would indicate our satisfaction and dissatisfaction with our purchase. This is why marketers would be interested in feedback and reviews to avoid or mitigate post-purchase dissonance. Cognitive dissonance refers to the discomfort individuals feel when there is a mismatch between their beliefs and actions. It is when a consumer feels negative emotions such as anxiety, regret, and dissatisfaction after making a purchase.

In the context of the IKEA Effect, individuals who invest time and effort in assembling furniture are less likely to experience cognitive dissonance. They are motivated to believe that the effort was worthwhile and that the resulting product is of high value to justify the exerted energy and time.

Social Identity and Sharing

It is already fun enough following the Instagram stories of someone building a LEGO set with their child, and we also feel invested watching cooking reels, how much more the person who’s doing it and sharing it! The IKEA Effect extends beyond the individual to social contexts. When individuals share their self-assembly experiences with others, the social identity associated with the product is strengthened. This could be through sharing photos of the assembled furniture on social media or discussing the assembly process with friends and family. The positive reinforcement from others further solidifies the perceived value of the product.

Cost Justification

The IKEA Effect plays a crucial role in justifying the cost of the product. When consumers perceive themselves as active contributors to the creation of the item, they are more likely to attribute a higher value to it. This effect helps reconcile the gap between the relatively low cost of IKEA furniture and the perceived quality and value associated with the finished product.

As a business owner, you can leverage the idea of The IKEA Effect. People simply put value on something that they have built with their own hands. We see this phenomenon in our daily lives more often than we realise. People for example would be ready to pay extra for apple plucking or strawberry picking, even though these fruits would cost less if you buy them from the grocery! We let our kids help us in the kitchen because they just appreciate the food more if they take part in making it. The act of self-assembly does significantly impact our perceptions of value. By understanding the underlying psychological principles at play, both consumers and businesses can appreciate the intricate dynamics that shape our attitudes toward products and the significance of our efforts in creating them.