Switching Costs

Switching costs give a company pricing power by locking customers into its unique ecosystem. Beyond the expense of moving, they can also be measured by the effort, time, and psychological toll of switching to a competitor.

Example: Salesforce.com, Inc.

Salesforce.com provides cloud-based solutions to facilitate customer acquisition and retention. Morningstar notes the high organizational risk of moving away from the platform, as well as the time, expense, and lost productivity associated with the implementation of a new application.

Risk: Investors should consider risks before investing. See dedicated risk factors section on this website.