Search Conferences

Type in any word, words or author name. This searchs through the abstract title, keywords and abstract text and authors. You may search all conferences or just select one conference.


 All Conferences
 EMAC 2019 Annual Conference
 EMAC 2020 Annual Conference
 EMAC 2020 Regional Conference

EMAC 2019 Annual Conference


How Freemium Pricing Affects User Activity
(A2019-9575)

Published: May 28, 2019

AUTHORS

Simon Stolz, WHU - Otto Beisheim School of Management; Christian Schlereth, WHU - Otto Beisheim School of Management; Christina Hofmann-Stölting, HAW Hamburg

KEYWORDS

Freemium; Propensity Score Matching; User Activity

ABSTRACT

In online platform businesses, where network externalities are crucial, user activity is of paramount importance. Prices are a key lever to influence conversion rates, but also impact customer mind-set and behavior, beyond determining demand. In this research we explore how conversion prices impact usage activity in freemium businesses. We analyze data of a large-scale pricing experiment in a freemium business, and compare the subsequent usage patterns of converters between different price groups. We utilize propensity score matching and difference-in-difference analysis to derive an estimation for the causal effect of conversion. We find that after conversion among high- compared to low-price converters, login frequency increases by respectively 25%, compared to 20%, and network growth increases by 30%, compared to 20%. Our findings suggest that pricing in freemium businesses poses a trade-off between conversion rate and user activity.