My recollections may be out of date, but in addition to golder's post above, the software upgrades were per-tail even if you didn't want or need the change and even encompassed software 'features' that you may really really want but are 'locked-out' from using if you are a non-US customer.
There was a solid foundation for this plan as it reduces whole-life costs by keeping a common standard. We (the UK) have had a nasty habit of skipping block upgrades and painting ourselves into an expensive corner or dead-end somewhere down the line. Programs with a more locked-in cycle (eg C-17) have delivered more capability at less long-term cost.
It is a bit galling to have to pay for something you are prevented from using and irritating to the extreme when capabilities you were expecting at ISD are kicked down the road and become something you have to pay for again as an 'upgrade'. Nobody had a better idea though.
Block 4 will be the first real peek at the shape of things to come. When you look at the money required for later blocks you could be in the situation where a cash-strapped minor F-35A user just cannot absorb the cost bulge and trades aircraft for a smaller bill. For countries that split their orders with a minor buy first and a well-meaning intent to purchase more F-35s later can find that a major depth servicing bill + block airframe changes + major software block update that also necessitates a weapons update / weapons buy, can make one heck of a bow-wave.
Anyone who questions the development and production costs of this aircraft is either naive or easily distracted by the cost growth. In the scheme of this program these genuinely jaw-dropping costs are dwarfed by the schizophrenic elephant in the room clutching the F-35 through-life costs with his manipulative long nose.
European tactical air is under serious threat without a shot being fired.