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Switch-Cost Analysis

Before renewing expensive vendor: compute real switch cost — may be less than you think.

60 min Advanced

Goal

Break "vendor lock-in" — switching often costs less than 6-12 months of price hike.

Steps

1

Compute current annual cost.

5 more steps locked

Expected Outcome

Immediate

You see switching is cheaper than thought.

Evidence base

School: Strategic Procurement / Game Theory

Founders: Carl Shapiro · Hal Varian (1999)

Shapiro & Varian — Information Rules (1999) on switching costs and lock-in; econ reference for B2B relationships.

Frequently asked questions

How long does "Switch-Cost Analysis" take?

This exercise takes about 60 minutes, practiced solo in a Written reflection format.

When will I notice the effect of "Switch-Cost Analysis"?

You see switching is cheaper than thought. In the short term: In negotiation, "ready to switch" card — powerful.

Is "Switch-Cost Analysis" evidence-based?

Yes — it draws on Strategic Procurement / Game Theory (Carl Shapiro, Hal Varian (1999)). Shapiro & Varian — Information Rules (1999) on switching costs and lock-in; econ reference for B2B relationships.

Is "Switch-Cost Analysis" suitable for beginners?

Its difficulty level is: Advanced. No external tools required — it can be practiced directly inside the app.

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