UK Consumers’ Willingness to Pay for Auto-Renewal Contract Attributes

Eleanya Nduka and Frisk Zhang

International Journal of the Economics of Business, 2024, vol. 31, issue 3, 239-253

Abstract: Firms and consumers widely utilize auto-renewal contracts (ARCs) due to their convenience. However, significant issues associated with ARCs indicate the need for policy intervention to reflect how consumers perceive the trade-offs involved in transitioning from one ARC to another. This study aims to enhance the existing literature by examining consumer preferences regarding alternative ARCs. To achieve this aim, we conducted a discrete choice experiment (DCE) to quantify the inherent trade-offs in ARCs. Our findings reveal several insights. Firstly, consumers prefer receiving auto-renewal reminders closer to the actual renewal date. This indicates they value timely notifications to help them make informed decisions about continuing or canceling their subscriptions. Furthermore, consumers expect traders to cancel inactive auto-renewal subscriptions within a shorter period of inactivity. This finding highlights the importance of addressing consumer concerns regarding on-going charges for services they no longer utilize.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:taf:ijecbs:v:31:y:2024:i:3:p:239-253

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DOI: 10.1080/13571516.2024.2376420

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