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There'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 s
by theoh 9y ago
There'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 9y 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 9y 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.