Switching costs, or the costs associated with a buyer changing suppliers, products, or vendor brands, can substantially impact industrial business. While typically calculated in monetary losses, switching costs can also involve lost time and effort investments. Switching costs are only substantial when judged against other options like keeping the status quo or choosing among multiple opportunities.
On the one hand, companies that offer products or services that are very easy to duplicate at comparable prices by competitors typically have low switching costs. These are commodities like Phillips screwdrivers, entry-level cars, most televisions, and many banking services.
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