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Free no more - investigating customer reactions to unexpected free-to-fee switches

Author

Listed:
  • Cziehso, Gerrit Paul
  • Schaefers, Tobias
  • Kukar-Kinney, Monika

Abstract

Many companies struggle with the consequences of introducing prices for previously free services, known as free-to-fee switches. We compare an unexpected forced free-to-fee switch, in which continued usage is only possible if the fee is paid, to a freemium switch, which entails the option to use a service with reduced features for free. Integrating price fairness theory and the concept of cannibalization, three experimental studies reveal detrimental effects of free-to-fee switches on fairness perceptions, attitude toward the company, and purchase intentions, which may partly be attenuated by a freemium switch. Furthermore, we examine different levels of feature reduction as a way for improving the effectiveness of free-to-fee switches. Overall, the findings question the common practice of unexpectedly introducing freemium business models, contribute to a better understanding of customer reactions to free-to-fee switches, and provide recommendations for companies intending to introduce a price for free services.

Suggested Citation

  • Cziehso, Gerrit Paul & Schaefers, Tobias & Kukar-Kinney, Monika, 2019. "Free no more - investigating customer reactions to unexpected free-to-fee switches," Journal of Business Research, Elsevier, vol. 101(C), pages 229-242.
    • Handle: RePEc:eee:jbrese:v:101:y:2019:i:c:p:229-242
    DOI: 10.1016/j.jbusres.2019.03.050
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    Cited by:

    1. Biraglia, Alessandro & Bowen, Karen T. & Gerrath, Maximilian H.E.E. & Musarra, Giuseppe, 2022. "How need for closure and deal proneness shape consumers’ freemium versus premium price choices," Journal of Business Research, Elsevier, vol. 143(C), pages 157-170.
    2. Schaefers, Tobias & Leban, Marina & Vogt, Florian, 2022. "On-demand features: Consumer reactions to tangibility and pricing structure," Journal of Business Research, Elsevier, vol. 139(C), pages 751-761.

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