Electronic Thesis and Dissertation Repository

Thesis Format

Monograph

Degree

Doctor of Philosophy

Program

Business

Supervisor

Antia, Kersi D.

Abstract

Whether to offset increased costs, signal quality, or respond to changing supply and demand conditions, a price increase can elicit a range of negative customer responses, from dissatisfaction to complaints, exits, and even boycotts. Although practitioners and academics agree that subscription businesses must justify their price increases, the comparative effectiveness of different justification types in reducing customer attrition remains uninvestigated. I use data from a 15-cell field experiment involving 10 cohorts comprising 1,655 customers, implemented by a multi-site Canadian storage provider, to assess how three price increase justification types—cost, market, and quality—affect customer attrition. In contrast to prior practitioner recommendations and academic research, I find that market justifications result in the lowest attrition rates. I then use the heterogeneity in the effects of these justifications across customers’ availability of alternatives and their distance from their chosen storage facility, to propose perceived switching costs as the mechanism that explains my findings. I also explore whether the effects of these justifications vary systematically across levels of price increase percentage and dollar amount, and the linguistic concreteness of the justifications. My thesis contributes to several multidisciplinary streams of literature on pricing, subscription businesses, and customer attrition behavior, and provides novel and actionable insights for managers.

Summary for Lay Audience

Price increases are a common occurrence, yet firms increasing their prices must risk facing their customers’ ire and potential exit when doing so. Subscription businesses, in particular, must be mindful of their customers’ reactions, due to the ongoing nature of their services, and the heightened price sensitivity of their customers. I seek to investigate whether and how subtle changes to subscription businesses’ price increase communication strategies might help them reduce the likelihood of their customers exiting the relationship (i.e., customer attrition). Specifically, I assess the impact of the type of price increase justification—i.e., the reasoning that the subscription business provides for its price increases—on customers’ decision to exit the relationship. Further, I explain the impact of different price increase justifications, using customers’ perceptions of the costliness of replacing their service provider (i.e., switching costs). Lastly, I examine the impact of the level of specificity and details of the justifications, and the percentage and dollar amount of the price increase, on customers’ exit decisions. Findings from my thesis would help subscription businesses reduce the risk of customer attrition in the aftermath of price increases.

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Available for download on Wednesday, February 18, 2026

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