Free No More: Investigating Customer Reactions to Unexpected Free-to-Fee Switches

Gerrit Paul Cziehso, Tobias Schäfers, Monika Kukar-Kinney

Research output: Contribution to journalJournal articleResearchpeer-review

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.
Original languageEnglish
JournalJournal of Business Research
Volume101
Pages (from-to)229-242
Number of pages14
ISSN0148-2963
DOIs
Publication statusPublished - Aug 2019

Keywords

  • Free-to-fee switch
  • Freemium
  • Price introduction
  • Price fairness

Cite this

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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.",
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Free No More : Investigating Customer Reactions to Unexpected Free-to-Fee Switches. / Cziehso, Gerrit Paul; Schäfers, Tobias; Kukar-Kinney, Monika.

In: Journal of Business Research, Vol. 101, 08.2019, p. 229-242.

Research output: Contribution to journalJournal articleResearchpeer-review

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