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Paper Title: The Psychology of Subscription Models: Why Consumers Stay Hooked on Monthly Payments
Authors Name: Samriddha Chakraborty
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IJRTI_203630
Published Paper Id: IJRTI2505112
Published In: Volume 10 Issue 5, May-2025
DOI:
Abstract: Over the past ten years, the global subscription economy has grown at an exponential rate, changing consumer buying patterns in a variety of sectors, including software, retail, entertainment, and digital services. From SaaS (Software-as-a-Service) platforms and Amazon Prime to Netflix and Spotify, subscription models have emerged as the go-to revenue model for companies. This dissertation investigates why customers keep paying for monthly subscriptions, frequently without consciously assessing their value, and what psychological aspects influence customer retention in subscription-based businesses. The study focuses on important psychological biases that affect decision-making and have their roots in consumer psychology and behavioural economics. These include inertia, sunk cost fallacy, loss aversion, and habit formation, all of which contribute to customers' reluctance to terminate subscriptions. The study looks into how companies purposefully create subscription models with features like auto-renewals, free trials, bundling, and tiered pricing to increase retention. The study also looks at the moral ramifications of subscription models, specifically regarding customer autonomy and well-informed decision-making. For this study, a mixed-methods research methodology was used, integrating qualitative and quantitative techniques. An online poll with 82 people who actively utilise subscription services was used for the quantitative component. The poll asked about spending patterns, cancellation behaviour, subscription habits, and psychological factors like commitment bias, loss aversion, and perceived value. Ten to fifteen participants were interviewed in-depth for the qualitative component, which focused on their individual experiences, reasons for keeping subscriptions, and difficulties trying to terminate services. According to the study's findings, subscription-based business models have their roots in psychology and frequently put customer retention ahead of customer satisfaction. These approaches are convenient and economical, but they also raise ethical questions, especially when companies purposefully complicate cancellation procedures or depend on customer inertia to maintain profits. According to the report, companies should implement more user-friendly features like subscription reminders, make cancellation procedures simpler, and have more open pricing practices. For customers to make better decisions about subscriptions, they also need to be made aware of behavioral biases that influence financial judgment.
Keywords: Behavioural economics, Loss aversion, Subscription-based business model, Customer Retention.
Cite Article: "The Psychology of Subscription Models: Why Consumers Stay Hooked on Monthly Payments", International Journal for Research Trends and Innovation (www.ijrti.org), ISSN:2455-2631, Vol.10, Issue 5, page no.b78-b95, May-2025, Available :http://www.ijrti.org/papers/IJRTI2505112.pdf
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ISSN: 2456-3315 | IMPACT FACTOR: 8.14 Calculated By Google Scholar| ESTD YEAR: 2016
An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 8.14 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator
Publication Details: Published Paper ID: IJRTI2505112
Registration ID:203630
Published In: Volume 10 Issue 5, May-2025
DOI (Digital Object Identifier):
Page No: b78-b95
Country: Kolkata, West Bengal, India
Research Area: Management
Publisher : IJ Publication
Published Paper URL : https://www.ijrti.org/viewpaperforall?paper=IJRTI2505112
Published Paper PDF: https://www.ijrti.org/papers/IJRTI2505112
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ISSN: 2456-3315
Impact Factor: 8.14 and ISSN APPROVED, Journal Starting Year (ESTD) : 2016

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