The Economics of “Free”: How Zero-Price Effects, Perceived Opportunity Cost, and Transaction Utility Shape Digital Purchase Decisions
DOI:
https://doi.org/10.54536/ajase.v5i2.8502Keywords:
Zero-Price Effect; Perceived Opportunity Cost; Transaction Utility; Digital Purchase Decision; Freemium; PLS-SEM.Abstract
Online markets have made it a standard to have free trials, freemium, zero-cost downloads, and massively discounted entry offers but the behavioural processes by which such offers influence or affect the decision to purchase have not been adequately integrated. The paper observes the effects of the zero-price effect and perceived opportunity cost on digital purchase behavior both directly and indirectly (via transaction utility). A cross-sectional survey generated 410 valid surveys on adults who have had recent experience of digital products and services. The 24 five-point Likert items were used to measure four reflective constructs and analysed using partial least squares structural equation modelling. The measurement model was found to be highly reliable in terms of indicators, internal consistency, convergent validity and discriminant validity. Full-collinearity and inner variance inflation factors were not critical. The structural findings have revealed that the perception of zero price has a positive effect of enhancing both the transaction utility and other digital purchases decisions, and that opportunity cost is perceived as a negative effect of both the outcome. The purchase utility of transaction has a positive impact on digital purchasing decisions and has a strong indirect impact on both antecedents. The model has a predictive relevance of both the endogenous constructs as has illustrated a positive proportion of the variance in the transaction utility and digital purchase decision as stood at 43.29 percent and 55.18 percent respectively. The results align transaction utility as a pivotal psychological process between price framing, perceived sacrifice, and online consumer decision-making.
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