A buyer who faces a significant cost of switching from product A to product B is said to be 'locked-in' to product A. Say that the cost to a buyer of switching from one long distance carrier to another is $100. Imagine also that the firm has mechanisms of charging different fees to different groups of customers. Then the carrier firm could raise prices to that customer above the prices of other firms until the present value of all future price premiums is $99. The firm can extract value from the customer approxiamately equal to the cost of switching.

It is common in these situations for firms to offer a discount for a a product until the customer is locked-in and then begin extracting the value of that lock-in. Think for instance of the plethora of 'introductory offers' that we see for providers of information services from magazines, through software companies, through internet service providers. It is also common for makers of durable products like aircraft engines or inkjet printers to offer the hardware at cost or below cost. Premiums can then be charged for spare parts and inkjet cartridges because once the hardware is purchased the cost of switching is high.