switching cost

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A means of building a competitive advantage into a product or service by involving buyers in an extra cost if they switch to an alternative supplier. It may form part of the physical characteristics of the product, which make it incompatible with the equipment of alternative suppliers (such as a different computer operating system), or the switching cost may result from the disruption of the quality of service formed by a long-established and close working relationship.

Subjects: Business and Management.

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