The psychology behind Audible’s pricing strategy

A few years ago, my boss told me I was crazy for subscribing to Audible. I had been researching subscription models for dozens of companies across several industries and markets, because our company was thinking of launching a SaaS product. Audible came up in my research not only because I subscribed, but because it was one of the more novel subscription models I had found.

Audible charges in one of two ways:

1. You can buy an audiobook ala carte—just like you would buy any book. You give Audible money; Audible gives you a book.
2. But there’s another way. You can subscribe to receive credits, which you can use to download books.

As an example, right now on Audible, you can buy Tina Fey’s Bossypants (which I highly recommend) for either $21.55 or 1 credit.

How do you get credits? Most people subscribe to a subscription plan:

	Gold Monthly	Gold Annual	Platinum Monthly	Platinum Annual
Price	$14.95/mo	$149.50/yr	$22.95/mo	$229.50/yr
Credits	1/month	12/year	2/month	24/year

At first glance, this looks like a pretty good deal: I can either pay $21.55 for the book or get a credit for $14.95 and use it to buy the same book.

But is it really? Compare it to Google Play. The same audiobook sells for $14.95 a la carte. No subscription required.

As you can see, Audible differs from its competitors (like Google Play) in two important ways:

1. You commit to pay in advance.
2. By subscribing, you commit to continue paying in advance. You make one decision now to prepay next month, and the next month, and the next month.

You can get the book for the same price, but only by also deciding to get books each subsequent month—which costs more in the long term. Isn’t that a worse deal?

Let me put it a slightly different way. Pretend it’s Monday morning and you’re on your way to work. You need coffee. You can either:

• pay $1.49 the day before and pick it up on your way to work, or
• pay $1.49 on Monday morning when you stop by Starbucks.

There’s no advantage to giving up your money earlier. Yet for many kinds of transactions, when given the choice, people are happy to. They pay the same amount in advance of the actual transaction. In fact, they’re happy to pay more for the same product in exchange for paying in advance. Why?

In this post, we’re going to explore the psychology behind Audible’s pricing strategy. And it’s not just Audible. Lots of companies use the same tactics. So even if you’re not an Audible customer, you’ll recognize the same strategies used by lots of other companies. We’re using Audible’s pricing strategy to illuminate the psychological principles that make it easier for you to part with your money. Specifically, you’ll learn why you often prefer payment schemes that often aren’t in your best interest.

We’ll cover this in two parts:

1. In the first half, we’ll tackle the perceived cost and explain why Audible books feel more inexpensive than they really are—even free, sometimes.
2. In the second half, we’ll look at the perceived price we pay, and the ways Audible’s strategy makes us feel like we’re paying less than we really are.

By looking at price and cost, we’re really looking at two sides of a single transaction.

Let’s dive in.

Part 1: The psychology of cost perception

Mental accounting

Audible separates the experience of paying from the experience of consuming. This might not seem like a big deal. After all, you give companies your money all the time without getting anything in return, at least right away. For example, when you pre-order a product that’s not available, or you order an item that’s out of stock, you’re willing to endure a delay—even after you’ve given up your money.

The reverse happens, too: you get the product, but you delay payment. Lots of people don’t own their houses, cars, or kitchen appliances; they opt to make a monthly payment instead.

Decoupling a transaction from consumption by making a payment by paying earlier or later is a common feature of a producer-consumer relationship.

So common we hardly ever think about it—or the ways it affects our behavior (or how much we spend). It doesn’t seem like a big deal.

Except it is. It’s a huge deal. The way in which Audible separates transaction from consumption affects how you feel about giving Audible your money, and it affects how you feel when Audible gives you an audiobook in return. That’s because the separation of payment and consumption affects your perception of the cost of consumption itself.

But how? We have a built-in desire to recoup costs. When you pay for something, you incur a cost. And when you receive the corresponding benefit, the cost is recouped. One is a loss, the other is a gain.

Behavioral economists call this mental accounting. When you pay for something, there’s not just a financial cost, but a cognitive cost as well—a debit to your mental account. And when you receive the corresponding benefit, there’s a credit to that same mental account. The credit balances the mental account, so the account closes. Remember, this debit-and-credit process doesn’t involve real money, only cognitive, felt costs and benefits.

Here’s an example of mental accounting. You head out for lunch with some coworkers. You order a sandwich, hand the cashier some money, get your sandwich, and eat it. Within a span of just a few minutes, you have incurred a cost by handing over money. But you have also received a benefit in return in the form of a sandwich. This benefit offsets the cost, or, better yet, exceeds it. At the end of this brief experience, your mental account is balanced, and you can close it.

But what happens if your mental account is still open after you’ve eaten the sandwich? What if the bread is dry and the lettuce soggy? Your consumption experience won’t be as good. You haven’t received enough benefit to offset the cost, and your mental account remains open after you leave the restaurant.

That’s mental accounting.

Now, imagine if a business can figure out how to close your mental account before the consumption experience? Or, what if they can get the graph to look like this:

It sounds it possible. How can you incur a cost, but receive no corresponding benefit—and come away from the experience with a closed mental account?

When you view a cost as an investment, consumption feels free

This gets at the larger topic of how businesses find ways to open and close mental accounts in ways that are disconnected from the acts of payment and consumption. You, the consumer, incur the cost. But you don’t receive the benefit—even if you feel like you do. Then, when the benefit actually arrives days, weeks, or months later, the product feels free.

Let’s pretend you just bought a case of wine for $400, but you don’t plan to drink it for a decade. If you’re like most people, you’ll agree with this statement: “I feel like I made a $400 investment, which I will gradually consume after a period of years.” And you won’t agree with this statement: “I feel like I just spent $400, much as I would feel if I spent $400 on a weekend getaway.”

This was a real scenario given to readers of Liquid Assets, a newsletter for people who like wine. Two economists, Eldar Shafir and Richard Thaler, asked people to imagine they spent $400 on wine for later consumption. How would they feel after drinking the wine? They learned that when you buy something for future consumption, it’s viewed as less of a cost and more of an investment.¹

In another study, Shafir and Thaler asked people to buy tickets to a concert series. Tickets to each concert cost $25. Or, with a subscription, tickets cost $15 each. When people bought a 2-year subscription in advance, they tended to agree with the statement: “I feel like I made a $120 investment, which I will gradually consume over the course of the next two years.”

Shafir and Thaler surveyed people after they attended the concerts they’d paid for. On a scale of 1 to 5, where 1 indicate strong agreement and 5 indicate strong disagreement, people gave this statement a 2.48: “I do not feel like this costs me anything, since I have already paid for the ticket, a long time ago.”

When you pay in advance, the cost feels more like an investment. With the passage of time, the pain of paying diminishes, so by the time you consume the product—drink the wine, go to the concert—the mental account is closed. There isn’t a mental account left open to balance. As a result, consumption feels free.

Here’s how Audible does this. They separate the transaction from the consumption: you don’t get a book when you incur a cost, and you don’t incur a cost when you get a book. They’re different experiences. That makes the audiobook feel free.

Cost depreciation

A quick review of where we are at: we need to feel satisfied to enjoy a consumption experience, and a closed mental account is the way to do this. By separating a transaction from the consumption, the mental account starts closing prior to consumption, so by the time we consume a product, it feels free.

What makes costs go down all by themselves?

Nothing. All it takes is the passage of time. It happens all by itself. This is called cost depreciation.

Let’s go back to our wine example. Compare two scenarios:

1. You’re attending a dinner party tonight, and you’re bringing a $50 bottle of wine you bought a year ago. The wine feels almost free.
2. You’re attending a dinner party tonight, and you plan to stop at the store on the way to pick up a $50 bottle of wine. You feel the cost of the $50.

But what about in-between time periods, such as the following:

1. You’re attending a dinner party tonight, and you’re bringing a $50 bottle of wine you bought six months ago. What feelings of cost do you have as you think about drinking the wine?
2. You’re attending a dinner party tonight, and you’re bringing a $50 bottle of wine you bought last month. What feelings of cost do you have as you think about drinking the wine?
3. You’re attending a dinner party tonight, and you’re bringing a $50 bottle of wine you bought last week. What feelings of cost do you have as you think about drinking the wine?
4. You’re attending a dinner party tonight, and you’re bringing a $50 bottle of wine you bought yesterday. What feelings of cost do you have as you think about drinking the wine?

Over time, the pain of spending $50 feels like the pain of spending $40, then $30, $20, $10, until finally, it feels like the wine is free. In fact, we can even calculate the rate of cost depreciation. It turns out that perceived costs depreciate at an exponential rate.²

If you’re a marketer at Audible who wants a consumer to feel like they’re already balanced their mental account by the time they consume your product, it’s helpful to know what the rate is.

Hold on a sec, you might say. How could we possibly calculate the rate of cost depreciation? It’s not an actual cost—it’s just a perception of cost?

True. If we look for perceived costs, we won’t find them.

But. We can look for how perceived costs affects human behavior. By looking at how humans behave, we can work backward to calculate how cost perception changes over time—and how we know perceived costs depreciate exponentially.

We can calculate the rate of cost depreciation by seeing how strongly people want to balance out their mental accounts as time passes. A strong desire to balance your mental account indicates costs are perceived as high. A low desire to balance out your mental account indicates costs as perceived as low. By tracking how badly you want to balance your mental account with a consumption experience at any given point in time, we can infer the perceived cost at that point in time.

Imagine you reserve tickets to a concert six months from now.

Now imagine it’s six months later and you’re sick. Do you still go to the concert?

The answer, it turns out, depends on when you pay: today, when you reserve the tickets, or the day of the concert, six months from now:

• Of people who reserve the tickets and pay today, 31% plan to go to the concert sick.
• But of people who reserve tickets and pay the same day as the concert, 53% plan to go to the concert sick.

Because of cost depreciation, people who pay far in advance don’t’ feel the cost as much, and therefore feel a weaker desire to balance out their mental account by attending the concert.²

The same thing happened when people were asked if they would attend a Chicago Bulls game if there was a snowstorm on the day of the game. People who bought the ticket the morning of the game were 23.3% more willing to brave the snowstorm and attend the game than people who bought the ticket six months earlier. This number jumped to 55.4% when tickets were priced at $100 instead of $50 each.²

There’s a clear desire to balance a mental account. This desire grows when the initial cost is higher, and it declines over time.

You can see more evidence of cost depreciation when you compare gym attendance rates to gym membership payments.

If people went to the gym at a consistent rate, then over a six-month period, each month would contain 16.6% of their attendance. (Each month is one-sixth or 16.6% of a six-month period.)

Yet that’s not what happens. People go to the gym a lot right after they sign up for a member. As time passes, they go less often. During a six-month period, 35% of gym attendance happens during the first month and only 6% happens during the last month.²

You might think this is the effect of New Year’s resolutions that fail. People sign up in January, but as the weeks and months go by, they don’t feel like working out.

To account for this, researchers did two things:

1. They included in the data only people who already been paying members with a habit of regular exercise. If someone paid in January, it wasn’t because they made a New Year’s resolution. It was because they had already been a member, and the bill for the next six-month period came due in January.
2. The researchers took the additional step of collapsing all first-month data together. In other words, it doesn’t matter whether the first month occurred in January, April, October, or December.

More telling, each time a gym member was billed for a new six-month period, the new attendance patterned emerged again: attendance jumped from 6% during the sixth month of the previous period to 35%–the first month of the new billing period. For example, if a bill came due in August, then researchers could expect July attendance to represent 6% of attendance in that previous six-month billing cycle, and they could expect August attendance to represent 35% of attendance in the new billing cycle.

What does this tell us about cost depreciation? In the first month of billing, people have a strong desire to balance out their mental accounts, to “get their money’s worth” by going to the gym. That’s why 35% of gym attendance happens during month one. But as time passes, perceived cost depreciates. By the sixth month, the desire to balance out the initial cost with an equivalent consumption experience is nearly gone. That’s why only 6% of gym attendance happens during month six of a billing cycle.

(Here’s an example of how marketers could use this to their advantage. Imagine you own a golf club where most people play golf when the weather’s nice—let’s say the months of May through September. If you bill annually, what month should you make the payment due? If they send in payment in May, they’re perceived cost will remain high through the prime playing season, which means they’ll play a few extra rounds of golf to help balance their mental account. But if they send in payment in October, several months will have elapsed by the time the weather is nice enough to play, at which point their mental account will have begun to close thanks to cost depreciation: they need to play fewer rounds of golf to balance the remainder of their mental account. Remember, if you own the golf course, you get the same revenue in both scenarios, but your course maintenance costs are lower if you send the bill during the month of the year that results in fewer rounds of golf during the prime playing season.)

It works the same way with Audible. You get billed, and from that moment on, the cost deprecates on its own with the passage of time. As the days and weeks go by, it takes a smaller and smaller consumption experience to balance your mental account. After enough time passes, it doesn’t feel like the download costs you anything.

Audible reinforces this. When you download a book, the message implies you’re getting the book for free:

Remember, Audible doesn’t need to do anything to make costs depreciate. Cost depreciation happens all by itself.

Of course, with one minor tweak, costs depreciate more quickly. We’ll explore this next.

Products feel like they cost less when you use them frequently

Cost depreciation accelerates the more you use the product. This is because each instance of usage acts as a small credit against the purchase price in your mental account.

This is probably something you intuitively know to be true. Let’s say you buy two identical queen size beds for $2,000 each. One is in your room. The other is in the guest room. One bed is used every time; the other is used a few times a year when friends and family visit. For which bed did you “get your money’s worth”?

The bed in your room–the one you sleep on every night. That’s because each time you sleep on your bed, you add a tiny credit to your mental account. Eventually, you’ve recouped the $2,000 you originally spent.

There’s no such accrual on the bed in the guest room.

What’s going on here?

Even as the cost depreciates over time, you’re taking the action of balancing your mental account more quickly by using the mattress frequently. Costs depreciate more quickly when you use the product more often.

Students make this same calculation at the end of the semester when they resell or trade in their used textbooks. They ask: how much are the textbooks worth?

Students who don’t use their book much or don’t like it value the book more highly than students who use the textbooks frequently throughout the semester. When one researcher asked students to rank their textbooks on a scale of 1 to 7, with 1 indicating “I have gotten my money’s worth” and 7 indicating “I have not gotten my money’s worth,” infrequent textbook users ranked the book a 5.0 and frequent textbook users ranked it a 3.4.³

This sounds backward. You would assume students who like books and use them a lot value them more, but they don’t. Instead, frequent use extracts value from the book, which makes it worth less to them. (There are interesting implications for the used textbook market. People with a lower perceived value are more likely to sell the book for cash, while people who have a higher perceived value are more likely to trade it in.)

Audiobooks are designed for frequent, sustained use. The average length of the top twenty books on Audible.com today is eight hours and forty-seven minutes. If you listen to one book per month, that’s eighteen minutes per day—while commuting, exercising, or running errands. Each time you listen, you extract a little more value. Your mental account has a positive balance long before you finish the book.

Part 2: The psychology of price perception

So far, we’ve seen that costs depreciate over time, along with the various factors that affect the rate of this depreciation. But there’s a parallel process going on, too. As the negative effects of costs become less negative over time, the positive experience of consumption becomes more positive over time.

Why you enjoy an audiobook more when you pay in advance

The main way Audible does this is by encouraging you to prepay for your book. But to see why let’s take a step back and examine the complicated relationship between transaction and consumption.

Specifically: what happens to our experience of the transaction when it happens at a different point in time from consumption, either before or after?

There are three ways the activity of transaction is disconnected from the activity of consumption:

1. Payment occurs before consumption. People often pay for travel experiences before they take the trip.
2. Payment occurs after consumption. For example, people often pay for cars and home appliances after they begin using them.
3. Payment is simultaneous but dissociated from consumption. Credit cards facilitate this kind of payment: expenses occur throughout the month, but the costs are collapsed together into one payment.

For some items, people prefer to pay before consumption and other items after consumption.

For example, let’s say you spend $1,200 on a vacation. When you spend before the experience, the cost begins to depreciate before the vacation happens. By the time you’re sitting on the beach, it’s in the past–far from your mind. But when you spend the money after the experience, the money can detract from the pleasure of consumption. You’ll be thinking about the bill while you’re swimming, snorkeling, and lounging on the beach. The stress of the cost takes away some of the pleasure of the vacation. Both vacations have the same price tag: $1,000. But the first vacation–the prepaid one–costs less.

Now imagine you need to spend $1,200 on a new washer and dryer. Your current washer and dryer aren’t broken, but you know they’re nearing the end of their usable life. Just like a vacation, spending the $1,200 in advance of the purchase makes bringing your new appliances home really enjoyable. But what about paying after you bring it home? Do you feel stress every time you do laundry for the six months you make payments? Are the clothes you wash less enjoyable to wear?

Of course not.

Two researchers confirmed this.⁴ They asked people about a vacation they might take: would people prefer to make six $200 payments before the vacation or six $200 payments after the vacation? Most people preferred to pay before going on the vacation:

• 60% preferred to pay $1,200 before the vacation
• 40% preferred to pay $1,200 after the vacation

But when they asked about a washer and dryer purchase for the same amount, the answers flipped:

• 16% preferred to pay $1,200 before receiving the washer and dryer
• 84% preferred to pay $1,200 after receiving the washer and dryer

Why do people prefer to pay for some items before consumption and other items after consumption? To answer this, we need to redefine what we mean by cost. Every transaction comes with two costs:

1. The first cost is the money you hand over–in the form of cash, check, or credit card, and paid either before or after the transaction. It’s the number on the price tag–what comes to mind when we normally think of the cost.
2. The second cost is the amount that, in the words of Drazen Prelec and George Loewenstein, “detracts from the consumption experience.”⁴

It’s that negative feeling you get when you think about the money you just spent.

The purpose of a vacation is to have a positive, pleasurable consumption experience. The purpose of a washing machine is to wash clothes. Prepaying for a vacation enhances consumption; prepaying for a washing machine doesn’t.

When consumption brings us pleasure, we prefer to extract maximum pleasure by paying before the consumption happens. Paying in advance doesn’t change the first cost, but it does reduce the second cost. Prepayment removes aspects of the consumption experience that will detract from its pleasure.

However, when consumption does not bring us pleasure, we prefer to pay after we begin consumption. That’s because the way in which we pay doesn’t change how we experience the thing we pay for. Unlike taking a vacation, washing and drying your clothes doesn’t get more pleasurable by prepaying.

Here’s another way to think about this: a vacation with a $1,200 price tag costs us more when payment happens at the start of the vacation than when payment happens six months earlier.

Audiobooks are more like vacations than washing machines. Part of the reason we buy them is the pleasure we derive from listening to them. You are more willing to pay in advance because doing so allows you to enjoy your book more.

Audible credits are a proxy for money

I’ve been referring to Audible books as products you can buy in exchange for money.

But that’s not technically correct. That’s because you don’t buy audiobooks with money, you buy them with credits. And buying a book with a credit is easier than buying a book with money.

But why? Isn’t a $14.95 credit that can be exchanged for a book the same as $14.95 in real currency—which can also be exchanged for the same book?

No. While $14.95 in cash and an Audible credit might be worth the same amount in purely economic terms, they are not worth the same in psychological terms. That’s because these two payment methods differ in transparency.

Payment transparency describes the difference between the perceived value and the actual value.

When a method of payment has high transparency, it feels like you’re exchanging something close to the real value of the money you’re spending. Cash is the most transparent form of payment. You can see it. You need to count it out and hand it over. When you pay for a product worth $20 using cash, it feels like you’re paying $20.

When the method of payment has low transparency, it feels like you’re exchanging less than the real value of the money you’re spending—in some cases, much less. You may be spending $20, but thanks to low transparency, you feel the same pain as if you were spending only $18, $15, or less.

Credit cards are a great example of a form of payment with low transparency. This is why people who pay with credit cards spend more when they shop,⁵ tip more at restaurants,⁶ and are more likely to forget how much they’ve spent.⁷ In one study, participants were willing to pay 113% more for tickets to a Celtics game and 76% more for Red Sox tickets when paying by credit card instead of cash.⁸

Proxies for money, such as casino chips, have a very low transparency.

Audible credits have low payment transparency, too. You’re more likely to spend a credit worth $14.95 than to spend $14.95 in real currency on the same book. An audible credit is a proxy for real currency.

It’s hard to spend money. It’s easier to prepay for a credit and exchange the credit for an audiobook. The payment feels less, which makes the book feel like a better value.

Flat-rate bias

There’s something else going on, too. We prefer to pay a flat rate in advance of consumption, even if doing so costs us more. This is called the flat-rate bias.

Research has shown this to be true. One study examined how 7,752 people used their $70-per-month gym memberships. After looking at how many times each member went to the gym and averaging out the price of each visit, the researchers discovered that people who opted to pay a flat rate each month spent 70% more than people who paid each time they went to the gym. In fact, 80% of the members who paid the flat rate each month would have actually saved money by paying each time they went to the gym.⁹ People who chose the flat-rate, monthly gym membership paid more not to go to the gym.

You can find examples of flat-rate bias in other industries, too. For example, research has shown that roughly 65% of people who pay a flat rate for their phone service each month would save money by choosing a per-call billing option, while 10% of people with a per-call billing option save money by paying a flat rate.¹⁰

In fact, a study of consumers across multiple industries shows that charging a flat rate increases the lifetime value of a customer by 82% to 145%, depending on how the numbers are calculated.¹¹

If the flat-rate bias is so disadvantageous to consumers, why, when given a choice, do they prefer it to a pay-as-you-go pricing? There are four likely reasons, according to Anja Lambrecht of the Anderson School of Management at UCLA, and Bernd Skiera from the University of Frankfurt:¹¹

1. The insurance effect: People are risk averse and pick a flat rate as a hedge against the possibility of overconsumption in the future. People are also loss averse, which means a small amount of overconsumption in the pay-as-you-go model is weighted more heavily than the same amount of underconsumption in a flat-rate model. Flat rate pricing acts like insurance against risk aversion and loss aversion.
2. The taxi meter effect: Watching the price tick upward makes your consumption experience less pleasurable. For example, one reason Uber has dislodged taxi monopolies is that paying a fee prior to consumption is more fun than watching the price on the taxi meter steadily increase while you ride.
3. The convenience effect: All things being equal, people prefer to make an easy choice over a hard choice. It’s easier to choose a default number than to try to calculate expected usage.
4. The overestimation effect: Thanks to the effects of advertising, people sometimes think they’ll use a product or service more than they actually will. A flat rate seems like a good deal at the moment you decide to spend money, but it’s a bad deal in the long run.

As I mentioned earlier, there are two costs to any transaction:

1. The number on the price tag, and
2. Anything that detracts from your ability to enjoy the consumption.

The reason you’re biased toward flat-rate pricing is that the extra cost incurred by the higher number on the price tag (#1) is more than offset by the lower cost you incur by being able to enjoy the experience more (#2).

And the reason companies prefer to offer a flat rate is because it grows revenue, and, when the marginal costs are low enough to offset the additional amount consumers are willing to pay, flat rates increase profits, too.

What kinds of products work well for flat rate pricing? In general, products with low or zero marginal costs can benefit from flat rate pricing. The marginal cost is the price the company pays for one more unit of whatever it’s selling. For example, the marginal cost of one more Netflix subscription or one more trip to the gym is basically zero, while the marginal cost of the marginal cost of sending a technician to fix my furnace isn’t close to zero—there are costs of time, labor, and parts associated with each instance of getting my furnace fixed. This is why Netflix can offer unlimited streaming, but the guy who fixes my furnace can’t offer unlimited repairs this winter.

What about books?

Books have high marginal costs, so flat rate pricing doesn’t work well. Take a look at the prices of the top five most sold nonfiction books on Amazon Charts, as of today:

Book	Price
Becoming, Michelle Obama	$32.50
Girl, Wash Your Face, Rachel Hollis	$22.99
Educated: A Memoir, Tara Westover	$28.99
Whose Boat Is This Boat?, Stephen Colbert	$14.99
How to Lead When You’re Not in Charge, Clay Scroggins	$22.99

While there is an acceptable range of what a book should be priced at—you’d probably question the book’s quality at $1.99, and you’d question the publisher’s sanity at $999.99—the prices vary too much to be considered flat. (This is part of the reason why Amazon’s Kindle Unlimited program, which offers unlimited access to books for a low monthly price, has such a limited book selection.)

Of the top five nonfiction books on Amazon, prices range from $14.99 to $32.50. However, Audible charges just one credit, which you can purchase for $14.95.

Here is the genius behind Audible’s pricing strategy: they’ve forced variable-priced goods into a flat rate pricing structure. Because consumers prefer to pay a flat rate, they’re more likely to buy the audiobook from Audible and buy more books in the long run.

The bottom line

Audible lowers the perceived cost of the book when you consume it. They do this by encouraging you to prepay. Thanks to mental accounting, the book feels like it costs less by the time you listen to it, which makes your listening experience more pleasurable.

Audible also makes it easier to spend money with them by encouraging you to get a regular subscription at a flat rate—which you prefer to paying for audiobooks each time you download them. They also make it easier to buy by making you pay for them with Audible credits instead of cash.

The result? You get more books and you’re happier with them—but you also might be spending more than you intend.

---

1. Shafir, E. and Thaler, R. (2006). “Invest now, drink later, spend never: On the mental accounting of delayed consumption.” Journal of Economic Psychology 27, 694–712
2. Gourville, J. T., & Soman, D. (1998). “Payment depreciation: The effects of temporally separating payments from consumption.” Journal of Consumer Research 25, 160–174.
3. Okada, Erica Mina (2001), “Trade-ins, mental accounting, and product replacement decisions,” Journal of Consumer Research 27 (4), 433–46.
4. Prelec, D., & Loewenstein, G. (1998). “The red and the black: Mental accounting of savings and debt.” Marketing Science 17, 4–28.
5. Hirshman, E. (1979). “Differences in consumer purchase behavior by credit card payment system.” Journal of Consumer Research 6, 58–66.
6. Feinberg, R. (1986). “Credit cards as spending facilitating stimuli: A conditioning interpretation.” Journal of Consumer Research 12, 384–356.
7. Soman, D. (1999). “Effects of payment mechanism on spending behavior: The illusion of liquidity.” Working paper, Hong Kong University of Science and Technology, Hong Kong.
8. Prelec, D. and Simester, D. (2000). “Always leave home without it: A further investigation of the credit-card effect on willingness to pay.” Marketing Letters 12(1), 5–12.
9. DellaVigna, S. and Ulrike, M. (2006). “Paying not to go to the gym.” American Economic Review 96 (3), 694–719.
10. Kridel, D. J., Lehman, D. E., & Weisman, D. L. (1993). “Option value, telecommunication demand, and policy.” Information Economics and Policy 5, 125–144.
11. Lambrecht, A. and Skiera, B. (2006). “Paying too much and being happy about it: Existence, causes, and consequences of tariff-choice biases.” Journal of Marketing Research 43(2), 212–223.