A lock-in effect exists when switching to a competitor costs the customer money, time or data, so they stay even when a better offer appears. The cost can be a contract, a proprietary file format, accumulated history, staff training, or hardware that only works with your system. Lock-in raises retention and weakens price pressure.
An example shows why customers stay. A company has used your accounting software for five years. A competitor is 10 euros a month cheaper, a saving of 120 euros a year. Migrating means exporting records, remapping accounts, checking balances and retraining two employees: say 40 hours of work at 50 euros an hour, so 2,000 euros. At 120 euros of annual saving, the switch pays for itself after almost 17 years. Nobody switches on those numbers.
Lock-in comes in a few forms: contractual, through minimum terms and notice periods; technical, through formats, hardware and integrations; data, through years of history that live in your system; and learning, through staff who know the workflow. The strongest kind grows on its own the longer someone is a customer.
There is a line between lock-in that comes from value and lock-in that comes from obstruction. Making export impossible, hiding the cancellation button or charging a fee to retrieve one's own data creates customers who leave at the first opportunity and tell others why. In the EU, people also have a legal right to receive their personal data in a common, machine-readable format, so an export function is not optional.
Build the useful version instead: integrations with tools the customer already uses, a history that becomes more valuable over time, saved settings and templates. Each one raises the cost of leaving without punishing anyone.
Look at the effect from the other side too. If you build your company on one payment provider, one marketplace or one advertising channel, you are the locked-in party.
Lock-in appears in generated business plans as one of the evaluated patterns.
