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

Cziehso, G. P., Schäfers, T., Kukar-Kinney, M.


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.



Publication type
Article in Journal

Peer reviewed
Yes

Publication status
Published

Year
2019

Journal
Journal of Business Research

Volume
2019

Issue
101

Start page
229

End page
242

ISSN
0148-2963

DOI