For someone to cancel cable service, the cable company requires customers to either stand in line to return their modem boxes or pay for the cost of the device. this is an example of a switching cost.
What is switching cost?
- The expenses a consumer incurs as a result of switching brands or goods are known as switching costs. Financial, psychological, effort-based, and time-based switching costs are all possible. High switching costs and low switching costs are two different categories of switching expenses.
- In the fields of marketing, strategic management, and microeconomics, switching costs and switching barriers are commonly used phrases. They may be characterized as the drawbacks or costs customers believe they incur, as well as the financial and emotional costs associated with changing from one choice to another.
- It makes it difficult to imitate a grocery store's service, for instance, if it provides free delivery while its rivals don't.
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