The Switching Cost Math

LinkedIn Post 12: The Switching Cost Math

Your AI vendor's model saved you $50,000 annually in energy costs over three years.

You want to switch vendors. The new vendor promises better service and 20% lower fees.

The switching cost calculation:

36 months of accumulated learning: $150,000 in cumulative energy savings
Learning transfer period: 12 months for new vendor's model to match old vendor's performance
Energy cost during transition: $50,000 (you lose savings for one year)
Migration costs: $5,000
Total switching cost: $55,000

The new vendor's fee savings: $12,000 annually × 3-year contract = $36,000

Switching cost ($55,000) > fee savings ($36,000). You stay with the expensive vendor.

You're trapped by economics.

But what if the incumbent vendor agreed to export the trained model (AVCGA-PORT)?

New vendor imports the learned model. Learning transfer period: 30 days instead of 12 months.

Switching cost drops to $5,000.

Switching cost ($5,000) < fee savings ($36,000). You can now switch.

Data portability doesn't just give you choice. It restores competitive dynamics.

Insist on AVCGA-PORT. The math changes dramatically.