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The developer needs to make enough profit/free cash flow/etc to build the next version. So it's essentially a bet on the expected lifespan of the current versi
by jonbarker 8y ago
The developer needs to make enough profit/free cash flow/etc to build the next version. So it's essentially a bet on the expected lifespan of the current version. Which is why if someone is offering something for free, forever, or very cheap, forever, you can bet that they are fairly certain they will never be displaced.
- wolco 8y agoNot always there is a period where new services are offered for free only to trap you into paying more later.
- theoh 8y agoThere's a literature about switching costs. One result suggests that the present value (technical term) of the customer to the company is equal to the cost of switching away, under certain assumptions. Obviously this formula is unhelpful/infinite in the case of total lock-in. I guess a good capitalist charges what the customer can bear, in that case.
- jonbarker 8y agoAgreed. To this I'd add that the switching cost is highly dependent on perception. Costs are almost always as much about perception as they are about reality.
- theoh 8y agoHmmm, I guess if one has any alternatives at all, your evaluation of their desirability is going to be subjective. Including in the case of "offers one can't refuse". But, when are our evaluations not subjective? That is the human condition.