Want More Sales at Higher Prices? Tap Into This Psychology.

There’s a slightly strange thing that happens to us when we feel like something is already ours. We find ourselves defending it more fiercely. We give it and assign it more value. We hesitate and struggle to part with it, even when the price or logic says we should.

This is what's known as the Endowment Effect, a well-researched psychological bias that shows up everywhere from second-hand stores and markets to the way we cling to old technology, unworn clothes we can't get rid of, or those half-read books that sit on our shelves. But the power doesn't lie in just understanding why we behave this way, it’s in how we as brands and retailers can shape the feeling of ownership long before a sale ever takes place.

At IGU Global, we’re not interested in gimmicks or cheap tricks. We believe in creating retail experiences and brand narratives that really move people, emotionally, psychologically, and behaviourally. So when we explore tools like the endowment effect, we don’t stop at the obvious. We go deeper. Because real value isn’t just about getting someone to click “buy” it’s about building belief, trust, identity, and belonging for a much longer term return

So let’s start with the basics, and then move into what most miss.

What Is the Endowment Effect?

Created by Nobel laureate Daniel Kahneman, the endowment effect talks to and describes our tendency to place way more value on things we own, simply because we own them. A little obvious perhaps but stick with me.

In one of his most renowned studies, Kahneman gave half the participants a mug, then offered the other half a chance to buy it. Objectively, the value of the mug was the same to both groups. But those participants who owned the mug wanted twice as much money to part with it as those who were willing to buy it.

The conclusion? Ownership, even when arbitrarily assigned, increases perceived value.

We don’t just buy with our wallets. We buy with our psychology.

So what's the Psychology Behind It: Loss Aversion and Imagined Ownership

Really closely tied to the endowment effect is loss aversion, it's our tendency to feel the pain of losing something way stronger than the pleasure of gaining something of equal value. It’s why we’re more upset about losing $50 than we are excited about winning $100.

Now, here’s where it gets super interesting for brands. Customers don’t actually need to own something physically for these biases to kick in. The simple feeling of ownership even if it's imagined, simulated, or previewed can trigger the same emotional stickiness.

This is where smart and clever businesses begin to unlock more sales, deeper loyalty, and the ability to charge premium prices.

Turning the Bias Into a Brand Advantage

So how do you create the feeling of ownership before a purchase?

Some examples are intuitive. Free trials in SaaS (Klaviyo, Shopify, Canva etc etc) give you temporary control of a product, this builds familiarity and preference. Personalised engraving on jewellery (hello, Tiffany) makes the item feel uniquely yours even before it gets ships. Visual simulations, like seeing a new couch in your living room through AR, help people picture the product in their lives. Some IKEA are masters at creating.

But let’s move beyond function. Let’s talk about feeling.

What Most Miss: Emotional Ownership > Functional Ownership

Here’s where many brand strategies fall short: they only focus on the thing and forget the meaning.

Customers don’t just value what they own, they really value what helps express who they are. That’s emotional ownership and it’s far more powerful than any type of functional ownership.

If the endowment effect is a bias about having, emotional branding is the practice of being. What does it mean for someone to see themselves in your product, your space, your story?

Ok so let's try this, imagine a sneaker brand simply letting customers design their own colorways, what if the brand positioned that experience as a rite of passage and a way to signal belonging to a culture, a tribe, a belief system? That’s when you start layering identity onto ownership. That’s when price starts becoming secondary and gets replaced with meaning.

Community Is Ownership, Too

Brands like Glossier, LSKD, and PANGAIA are examples of brands that understand this intuitively. Their customers don’t just buy products, they join movements and adopt values. They speak a common language and that’s emotional ownership at scale.

When you feel like a brand is yours because you’ve been there since the early days, or you helped vote on the next drop, or you’re part of a private group, you don’t just buy more. You advocate. You defend. You stay. This was something I experienced both internally and externally during my 10 years at Nike.

Community-driven brands unlock the endowment effect not through individual product interaction, but through collective identity. “I’m not just a customer. I’m actually part of this.”

What About Retail? IRL Is Where Ownership Comes Alive

This is where most DTC and digital brands overlook an incredible advantage and the crazy power of physical retail to deepen emotional ownership. The act of walking into a store, trying something on, customising it on the spot, or seeing your name printed on a product are all powerful psychological cues. They turn passive shoppers into active participants who have bought into the brand's ethos.

At IGU, we’ve seen first-hand how tactile experiences, from sneaker bar activations to interactive art displays, can turn a store into a studio and a place where the customer leaves not just with the product, but with the story. What we need to understand is that ownership doesn’t just happen at the till. It happens in the fitting room, the engraving station or that photo wall. It's in any moment someone imagines, “this was made for me.”

Post-Purchase Is Where Loyalty Begins

Too often, brands focus their emotional efforts on conversion and forget about what happens after. It's in the post-purchase where the endowment effect can really work in your favour, or not.

Those great brands always build emotional retention into the unboxing, the onboarding, and throughout the customer journey.

I recently purchased a new laptop and I still remember the delight of opening Apple packaging, the weight, the sound, the friction of the box sliding open. Or experiencing customers whilst at Nike get their name on custom sneakers. These aren’t accidental touches. They were and are carefully designed emotional reinforcements: “this is yours,” “you made the right choice,” “you belong here.”

WIf a retailer or brand wants to reduce returns or increase lifetime value? Easy. Reinforce ownership after the sale. Don’t just close the cart but open a story.

What We’d Recommend at IGU Global

If you’re a brand leader, retail owner, or founder, and you want to integrate this into your business, here’s where to start:

1. Map Ownership Moments

Use our Emotion-Led Planning Canvas to identify where ownership is felt across the journey and figure out if its pre-sale, in-store, post-purchase.

2. Add Emotional Layers to Product Interaction

Don’t just offer personalisation if this is your thing. Contextualise it. Tell the customer why it matters, what it says about them and what it means in your world.

3. Build Community, Not Just Loyalty Programs

A punch card gets you some repeat purchases. A sense of belonging gets you advocacy. Use events, group chats, exclusive drops, or creative collaborations to let your community shape your brand. There's nothing more powerful than giving your brand to the customer asking “you tell us”

4. Design the Post-Purchase Narrative

Create onboarding sequences that celebrate your customer’s decision. Make unboxing an experience, not an afterthought. Let people share their ownership in ways that reinforce identity.

My final thoughts

Ownership is no longer just about transactions. In the emotional economy, it’s about participation, identity, and meaning. This is the cultural currency every brand wants.

When brands activate the endowment effect ethically, not to trick, but to truly connect, they create something super rare. They create customers who care, remember, return, and most importantly they tell others. Not because they were sold to, but because they really felt seen.

Remember, human emotion remains your most valuable, and irreplaceable asset.

Let’s build from there.