Written by Josh McQueen, VP of Marketing and Product at Passare

A couple of years ago, when interest rates were at an all-time low, and the housing market was a little wild, my wife and I began seriously considering selling our house. We had only been in our home for a few years, but it had already appreciated quite a bit. So, we were pretty confident we could make a significant gain from selling it.

When we began to think about a sale, however, we started to think through the impact of making this decision.

We knew we would have to pack up our entire house, leave a neighborhood close to my office, church, and kids' schools, and move away from neighbors that we love. While we had weighed all of these decisions a few years earlier and found it worthwhile, we decided for all the reasons above that this time around, it didn't make sense.

So, we stayed put.

While this example was a story about my family, people face a similar dilemma when they evaluate technology. For instance, some of you have weighed the pros and cons of moving from Android to iPhone (or vice versa). The financial cost is rarely in question with this decision. Instead, the internal debate is whether joining the blue bubble club of iMessage that all your friends utilize is worth the effort in learning a new operating system.

The question is not about the financial cost but the switching cost.

The most significant cost of technology is rarely the price tag of purchasing it but the switching cost of implementing and adopting it. As a decision-maker in your business, you must decide whether the technology you want to implement is worth the investment and risk of adopting it. This investment includes finances, but it also consists of the switching cost of change.

To be more specific, you can place these switching costs into two categories: short-term and long-term.

Short-term switching costs

Short-term switching costs are much easier to recognize because the impact is more immediately visible. Examples are reworking your processes to fit the new technology, training staff, and migrating data.

Long-term switching costs

Long-term switching costs, however, are often ignored because the implications are less obvious upfront. The big thing to evaluate in long-term switching costs is the risk you take to make the same change again. For instance, you may find the perfect house to buy, but it is in a declining neighborhood. The long-term risk of having to move again may outweigh the immediate gratification it gives you. In the same way, choosing a technology company that isn't going to support or scale with your business runs you the same risk.

Next steps: Do your research before switching!

I'll leave you with this: while you can never wholly remove switching costs from the equation, you can find companies that will help you better understand and mitigate those costs to your business. Make sure you do your due diligence and get the answers you need before you commit to an investment in technology.

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