What is Switching Cost?
Definition
The time, effort, and money required to migrate from one subscription service to a competing alternative.
Understanding Switching Cost
Switching costs are the practical barriers to changing services. They include data migration (moving files, history, settings), learning curve (adapting to new interfaces), integration updates (reconnecting tools and workflows), and potential downtime during transition. High switching costs benefit service providers but harm consumers by limiting competition.
When evaluating a new subscription, consider potential switching costs upfront — choose services that make it easy to export your data and don't create unnecessary dependencies. Standards like open APIs and common file formats reduce switching costs.
Related Terms
Lock-In
A situation where switching from one subscription service to another becomes difficult or costly due to data, workflows, or ecosystem dependencies.
Data Portability
The ability to easily export and transfer your data from one subscription service to another in a usable format.
Cancellation
The act of ending a subscription, which stops future billing and eventually terminates access to the service.
Subscription
A recurring payment arrangement where a customer pays at regular intervals to access a product or service.