Higher Profits Through Customer Lock-In

Author Joachim Büschken adeptly presents a different form of pricing strategy based on making it more expensive for customers to switch from your product to a new one, even if your product fails them. This concept, called "customer lock-in," entails charging such high "switching costs" for changing vendors that customers are stuck. It means that consumers who buy deficient software or earn frequent flier miles on a chronically tardy airline are reluctant to change because switching is a big nuisance or too expensive. While your business may not embrace this idea, some hardware (Hewlett-Packard) and software (Microsoft) companies use it to great advantage. To his credit, Büschken has a short section on the ethics of lock-in. He concludes that it is ethically okay given disclosure, though you may want to have a deeper discussion. While the writing can be repetitive and dry, getAbstract.com finds that this is a rare book on a sensitive topic. We recommend it to marketers and product strategists who want to learn more about this little-known, potentially controversial pricing practice. It is also a pretty good eye-opener for consumers; customer lock-in takes caveat emptor to new heights (or depths).