Pricing Innovations: The Role of Perceived Power in Consumer Responses to Brands Offering Subscriptions with Consent-Based vs. Automatic Renewal
(A2024-119594)

AUTHORS

Wuraola Falana, Hanken School of Economics

ABSTRACT

While subscription model is attractive to many firms, as it ensures constant cash flow into their businesses, consumers are exhibiting a growing concern towards subscription offerings evidenced as subscription fatigue. What is unclear is whether subscription model is what consumers do not like or it is about how subscription model is being implemented. The results of the present research show that perceived lack of power over purchase decisions is why consumers resist the prevalent subscription type (i.e., automatic renewal subscription) in the market today. Furthermore, price discount is ineffective to eradicate the power issue that underlies automatic renewal subscription. However, when given the choice to choose between automatic renewal subscription and consent renewal subscription, price discount becomes effective to make consumers elicit favorable disposition towards automatic renewal subscription and the brands that introduce it.