Behavioral Economics and Pricing Strategy Optimization in the Digital Age---A Case Study of Spotify

Research Article
Open access

Behavioral Economics and Pricing Strategy Optimization in the Digital Age---A Case Study of Spotify

Jiaoyang Chen 1*
  • 1 College of Art and Science, Boston University, Boston, USA    
  • *corresponding author helenncjyy@gmail.com
AEMPS Vol.187
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-80590-173-0
ISBN (Online): 978-1-80590-174-7

Abstract

This study explores how behavioral economics principles can be effectively applied to optimize pricing strategies in the digital economy. It challenges the traditional assumption that consumers are always rational decision-makers and highlights how psychological tendencies such as the sunk cost effect, present bias, and loss aversion influence purchasing behavior. Taking Spotify as a representative case, the research shows how free trials, flexible subscription options, and promotional gifts can encourage users to convert to paid services and maintain long-term engagement. These strategies take advantage of consumers’ emotional responses, making them more likely to continue using the service after experiencing its benefits. While effective in boosting market performance and user loyalty, such strategies may also raise ethical concerns. If companies rely too heavily on psychological manipulation or fail to meet user expectations, it could result in consumer disappointment and a decline in brand trust. Therefore, the study emphasizes the importance of balancing commercial success with ethical responsibility. The research is limited by its focus on digital platforms, and future studies are encouraged to explore the impact of behavioral pricing in other sectors. Cultural and demographic factors should also be considered to better understand their role in shaping consumer responses.

Keywords:

Behavioral Economics, Pricing Strategy, Consumer Psychology, Digital Platforms, Spotify

Chen,J. (2025). Behavioral Economics and Pricing Strategy Optimization in the Digital Age---A Case Study of Spotify. Advances in Economics, Management and Political Sciences,187,33-38.
Export citation

References

[1]. Elfenbein, D. W., Fisman, R., & McManus, B. (2019). Does cheap talk affect market outcomes? Evidence from eBay. American Economic Journal: Applied Economics, 11(4), 305-326.

[2]. Cristofaro, M. (2017). Herbert Simon’s bounded rationality: Its historical evolution in management and cross-fertilizing contribution. Journal of Management History, 23(2), 170-190.

[3]. Cristofaro, M. (2017). Herbert Simon’s bounded rationality: Its historical evolution in management and cross-fertilizing contribution. Journal of Management History, 23(2), 170-190.

[4]. Jayawardena, A. M. A., & Nanayakkara, N. S. (2025). How Does Loss Aversion Mediate the Relationship Between Personality Traits and Efficiency of Skills in Investment Decision-Making?. International Review of Management and Marketing, 15(1), 293-301.

[5]. Skwara, F. (2023). Effects of mental accounting on purchase decision processes: A systematic review and research agenda. Journal of Consumer Behaviour, 22(5), 1265-1281.

[6]. Chukwu, G. C., & Dagogo, D. Free Sample Usage and Sales Performance of Selected Supermarkets in Port Harcourt Metropolis. International Journal on Integrated Education, 4(5), 148-165.

[7]. Gal-Or, E., & Shi, Q. (2022). Designing entry strategies for subscription platforms. Management Science, 68(10), 7597-7613.

[8]. Alodia, J. E., & Qastharin, A. R. (2024). The Impact Of Spotify Advertisements On Free Accounts To Purchase Decisions For Spotify Premium Accounts With Consumer Attitudes As The Mediating Variable. Journal Integration of Management Studies, 2(1), 140-147.

[9]. CoSchedule. (2023, April 24). Spotify marketing strategy: The sound of success. CoSchedule. https://coschedule.com/marketing-strategy/marketing-strategy-examples/spotify-marketing-strategy

Cite this article

Chen,J. (2025). Behavioral Economics and Pricing Strategy Optimization in the Digital Age---A Case Study of Spotify. Advances in Economics, Management and Political Sciences,187,33-38.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

Disclaimer/Publisher's Note

The statements, opinions and data contained in all publications are solely those of the individual author(s) and contributor(s) and not of EWA Publishing and/or the editor(s). EWA Publishing and/or the editor(s) disclaim responsibility for any injury to people or property resulting from any ideas, methods, instructions or products referred to in the content.

About volume

Volume title: Proceedings of ICMRED 2025 Symposium: Effective Communication as a Powerful Management Tool

ISBN：978-1-80590-173-0(Print) / 978-1-80590-174-7(Online)
Editor：Lukáš Vartiak
Conference website: https://2025.icmred.org/Bratislava.html
Conference date: 30 May 2025
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.187
ISSN：2754-1169(Print) / 2754-1177(Online)

© 2024 by the author(s). Licensee EWA Publishing, Oxford, UK. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license. Authors who publish this series agree to the following terms:
1. Authors retain copyright and grant the series right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this series.
2. Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the series's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this series.
3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See Open access policy for details).

References

[1]. Elfenbein, D. W., Fisman, R., & McManus, B. (2019). Does cheap talk affect market outcomes? Evidence from eBay. American Economic Journal: Applied Economics, 11(4), 305-326.

[2]. Cristofaro, M. (2017). Herbert Simon’s bounded rationality: Its historical evolution in management and cross-fertilizing contribution. Journal of Management History, 23(2), 170-190.

[3]. Cristofaro, M. (2017). Herbert Simon’s bounded rationality: Its historical evolution in management and cross-fertilizing contribution. Journal of Management History, 23(2), 170-190.

[4]. Jayawardena, A. M. A., & Nanayakkara, N. S. (2025). How Does Loss Aversion Mediate the Relationship Between Personality Traits and Efficiency of Skills in Investment Decision-Making?. International Review of Management and Marketing, 15(1), 293-301.

[5]. Skwara, F. (2023). Effects of mental accounting on purchase decision processes: A systematic review and research agenda. Journal of Consumer Behaviour, 22(5), 1265-1281.

[6]. Chukwu, G. C., & Dagogo, D. Free Sample Usage and Sales Performance of Selected Supermarkets in Port Harcourt Metropolis. International Journal on Integrated Education, 4(5), 148-165.

[7]. Gal-Or, E., & Shi, Q. (2022). Designing entry strategies for subscription platforms. Management Science, 68(10), 7597-7613.

[8]. Alodia, J. E., & Qastharin, A. R. (2024). The Impact Of Spotify Advertisements On Free Accounts To Purchase Decisions For Spotify Premium Accounts With Consumer Attitudes As The Mediating Variable. Journal Integration of Management Studies, 2(1), 140-147.

[9]. CoSchedule. (2023, April 24). Spotify marketing strategy: The sound of success. CoSchedule. https://coschedule.com/marketing-strategy/marketing-strategy-examples/spotify-marketing-strategy

For authors
Guide for authors Policies for authors Aims and scope Subscription Open access policy
For editors
Policies for editors Editorial board
For reviewers
Policies for reviewers Privacy policy

Cookies are used by this site.
Copyright © 2024 EWA Publishing, its licensors, and contributors. All rights reserved, including text and data mining, AI training, and similar technologies.