Web Books, Inc., provides accounting applications for business customers on the Web for a monthly subscription. Web Books customers run their accounting system on the Web; thus, the business data and application reside on the servers of Web Books, Inc. The senior management of Web Books believes that once a customer begins to use Web Books it would be very difficult to cancel the service. That is, customers are “locked in” because it would be difficult to move the business data from Web Books to another accounting application, even though the customers own their own data. Therefore, Web Books has decided to entice customers with an initial low monthly price that is half of the normal monthly rate for the first year of services. After a year, the price will be increased to the regular monthly rate. Web Books management believes that customers will have to accept the full price because customers will be “locked in” after one year of use.
a. Discuss whether the half-price offer is an ethical business practice.
b. Discuss whether customer “lock in” is an ethical business practice.