IKEA's flat pack: when the customer's effort is part of the price and the value

The story IKEA tells about its flat pack goes back to the mid-1950s. Gillis Lundgren, a designer and one of the company’s first employees, had to take a table to a catalogue photo shoot and could not fit it into his car, so he took the legs off. The table was Lövet, from 1956, and the company traces the flat-pack idea to that moment; it is a founding story, and the details shift a little between tellings. What is documented is the system that grew from it. IKEA designs furniture to travel in flat boxes, stocks it in warehouse aisles that customers walk through themselves, and leaves the assembly to the buyer, with wordless picture instructions and a hex key in the bag.

Decades later, three researchers gave part of the arrangement a name. In experiments circulated in 2011 by Michael Norton, Daniel Mochon and Dan Ariely, people who assembled an IKEA storage box, folded origami or built Lego sets valued their own creations more than identical objects built by others, and were willing to pay more for them. The effect held only when the task was completed: people who could not finish, or whose work was taken apart, did not show it. The authors called it the IKEA effect, and the paper appeared in the Journal of Consumer Psychology in 2012.

Effort on both ends of the stick

The Value Stick marks four notches on a rod: what the customer is willing to pay, the price, the company’s costs, and what suppliers need in order to take part. Flat pack moves more than one of them. Shipping air is expensive, so flat boxes cut freight and storage costs, and handing the picking and the building to the customer takes labour off IKEA’s cost line. A good part of that saving reaches the price tag.

The customer pays the difference in effort: an evening on the floor with a diagram. In the method, perceived value is benefits minus perceived sacrifices, and assembly clearly counts as a sacrifice. The IKEA effect adds something to the other column. Finished well, the same evening raises what the customer thinks the result is worth. Cutting costs on its own only moves the middle notches of the stick; here one design choice lowers the cost and lifts the top notch too.

Standing beside the customer

Our books read IKEA as the orientation figure among the postures of power: a brand that stands next to the customer instead of facing them across a counter. The proofs of that posture are operational. The store has a set route, the warehouse is self-service, the instructions carry no words, and most of the work happens at home. Customers tend to forgive a wobble or a missing screw more easily than they would from a brand that promised to handle everything, because they share authorship of the result.

The posture comes with a premise, a door that selects. People who want furniture delivered and assembled with no involvement, or who will never spend an evening with a hex key, are not the customer the core offer was designed around, and IKEA has built its prices on that choice.

Where effort stops paying

The research comes with a condition attached: the effort has to end in success. Effort that ends well turns into pride. Effort that ends in a missing part, or a wardrobe that will not stand straight, turns into a grievance with the brand’s name on it. So the value depends on the design of the instructions and the fittings as much as on the furniture.

IKEA has added services over the years, including home delivery and paid assembly, and in 2017 it bought TaskRabbit, a platform for booking people to do small jobs such as putting furniture together. Each service removes a sacrifice for the customers who want it removed. For those customers it also removes the part of the experience that made the furniture feel like their own. How much effort a company can take away before its customers stop feeling like co-authors is a question IKEA keeps answering one service at a time.

If your offer asks something of your customers, it is worth knowing which part of that effort they count as a cost and which part they count as value. Mapping it is part of what we do.