When time pressure counters the zero price effect

Abstract

Purpose The freemium pricing model is dominant in digital products such as mobile applications. While limited evaluation of a product such as when a consumer is under time pressure, has been found to increase consumer preference for the free version (“the zero price effect”), this paper aims to explore moderators that attenuate or reverse that effect. Design/methodology/approach Three experiments test the role of anchoring effects induced by time pressure in moderating the zero price effect. Findings The studies offer evidence that anchoring effects induced by time pressure can be directed to reduce preference for free versions of products. In addition, these effects are mediated by the perceived performance risk of a product and an upper boundary condition for monetary price level is found. Research limitations/implications This research demonstrates exceptions to time pressure’s role in intensifying the zero price effect. Future research could focus on additional moderators of the effect such as the need for certainty and examine time pressure’s effect on in-app purchases. Practical implications These findings can be directly applied by marketers of digital products using a freemium pricing model who wants to use time pressure to create urgency with customers without pushing them toward the free version of a product. Originality/value This paper finds exceptions to the zero price effect where consumers exhibit a stronger preference for the paid (vs free) version of a product when under time pressure.