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8 Types of Switching Costs

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Switching costs are costs that are incurred by a customer to switch between products or services. The following are common types of switching costs.


The time and expense of learning about a new product or service. If you purchase a new type of mobile device, you need to learn its interfaces.


The requirement to get a new product or service working with everything else you own. For example, importing your data into software.


The need to configure and customize the new product or service.


The need to create things for the new product or service. For example, the need to develop software to use a new database product.

Productivity & Efficiency

A decrease in productivity and efficiency due to the process of learning and integrating a new product or service. For example, a salesperson works more slowly after switching to a new type of sales automation software.

Business Disruption

The potential for your customer services, marketing or operations to go offline as you make changes or switch over.


Risks associated with a new product or service. If you try a new shampoo, you may risk a bad hair day.

Cancellation Fees

Penalties charged by your current provider such as a cancellation fee. It is common for firms such as telecom companies to attempt to increase switching costs to retain customers, even if they are dissatisfied. Firms with high switching costs may have little incentive to improve customer satisfaction.
Overview: Switching Costs
Costs that are incurred by a customer to switch between products or services.
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