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The cup-of-coffee pricing fallacy

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Re: The cup-of-coffee pricing fallacy

#31

Post by sukilot »

notyourday wrote: post #6

I'm the person who has been quoted. The person whom I addressed that was going to run a business selling access to a commenting feature . https://news.ycombinator.com/item?id=22209411 The competition for that feature is free comments via Facebook so anyone who does not want to spend money has that ability. The other set of "competitors" is accessed for free via open source software that one can install. As soon as th…

> Well, a dinner for 2 in major cities is the USA is going to run you about $120.

Not for the vast majority of people.

Re: The cup-of-coffee pricing fallacy

#32

Post by tootie »

gruez wrote: post #8
tootie wrote: post #3

It's funny because I've often had the opposite thought. Cafes should sell subscriptions. The margin on a single cup of coffee is humongous because there's so much overhead in running a cafe and such variable demand. That seems like a perfect business case for a subscription model.

Sounds like a great way to end up with a cafe full of freelancers working on their macbooks.

A lot of them already are. And they pay $3 and sit there all day.

Re: The cup-of-coffee pricing fallacy

#33

Post by fortran77 »

Of course this author has to virtue signal about how _he_ would never buy a Starbucks coffee

> First off, I would personally never buy a cup of coffee at Starbucks. But I understand why some people would.

He'll only take his Arch Linux Pinebook (ok, I just assumed that) into his "local roaster"

> The cup-of-coffee-fallacy becomes much more obvious when it comes to subscription services. I might buy a cup of coffee from my local roaster, and would happily buy many cups, some beans, and snacks on a regular basis.

Re: The cup-of-coffee pricing fallacy

#34

Post by notyourday »

sukilot wrote: post #31
notyourday wrote: post #6

I'm the person who has been quoted. The person whom I addressed that was going to run a business selling access to a commenting feature . https://news.ycombinator.com/item?id=22209411 The competition for that feature is free comments via Facebook so anyone who does not want to spend money has that ability. The other set of "competitors" is accessed for free via open source software that one can install. As soon as th…

> Well, a dinner for 2 in major cities is the USA is going to run you about $120. Not for the vast majority of people.

https://www.zagat.com/b/48.56-what-can-you-get-for-nycs-aver...

That's from 2013.

The vast majority of people are not potential customers for a small SaaS startup charging money for "it would be nice to have" service.

Re: The cup-of-coffee pricing fallacy

#36

Post by WalterBright »

gwd wrote: post #18
moolcool wrote: post #14

Earlier quoted context omitted.

That's a good "problem" to have if you price and market it correctly

Right, but then you don't really have a coffee shop anymore. I disagree with the posters above who say there's a 90% markup on the coffee. What you're buying at Starbucks isn't a coffee, but a coffee plus the right to sit at a table and use the wifi for an hour or two. And as OP points out, at the moment, this is pay-per-use: when I need a place to sit down for a bit, whether in my own city or some other city, or whe…

> I disagree with the posters above who say there's a 90% markup on the coffee.

That's how accounting works. The 90% markup is on the coffee, and if you sell enough coffee you can cover the overhead of the cafe. I.e. there's margin and there's net income.

Re: The cup-of-coffee pricing fallacy

#37

Post by kaoD »

WalterBright wrote: post #35

I drink a pot of coffee a day, which works out to around $.03 per cup. Pretty cheap for that vice. I know that Starbucks tastes better than my drip machine, but I don't really care. Coffee is coffee to me, java junkie that I am.

Just get an espresso machine (the real ones, no capsules) and a bean grinder. Coffee from freshly-ground beans tastes way better than Starbucks, is still $.03 per cup and takes only a few seconds to make with an electric grinder.

Moka pots work too and are cheaper (though espresso machines are real cheap at least here in Europe) but the coffee isn't as creamy and it takes a few minutes to boil (even though it needs no attention). With a large moka pot it's easier to make large quantities though (but I hate stale coffee so I favor espresso machines). Still better than drip.

If you're really into coffee get a superautomatic machine. Best coffee I've ever had, instant and with zero effort.

Re: The cup-of-coffee pricing fallacy

#38

Post by WWLink »

jmnicolas wrote: post #19

The problem with "cup-of-coffee pricing" is that if I trust everybody that has a subscription to sell to me, at the end of the month I will be broke. Too much subscriptions is death by a thousand cuts.

Plus what kinda cup-of-coffee are we talking here? A pack of coffee costs me ~$7 and will last me at least a few dozen cups! Even if I count a generous amount of creamer, that's $3-4 a bottle and should be good for at least a dozen cups of coffee (again, really generous with that creamer lol).

If I'm out of town I'll grab a cup at mcdonalds or something. The regular cofee maxes out around $1.59. Or I could go fancy and get a medium caramel macchioto for $3.25 or so.

So you're telling me I can get their software for $0.50-$3.25 a month? Not bad! :D

Re: The cup-of-coffee pricing fallacy

#39

Post by WWLink »

notyourday wrote: post #22
jmnicolas wrote: post #19

The problem with "cup-of-coffee pricing" is that if I trust everybody that has a subscription to sell to me, at the end of the month I will be broke. Too much subscriptions is death by a thousand cuts.

Exactly. People who want a service for $5.00/mo aren't viable customers for SaaS

They can be if the SaaS is really really simple. I'm imagining stuff like what used to be $25 shareware that the owner now charges $10 a year for.

Re: The cup-of-coffee pricing fallacy

#40

Post by WWLink »

gwd wrote: post #18
moolcool wrote: post #14

Earlier quoted context omitted.

That's a good "problem" to have if you price and market it correctly

Right, but then you don't really have a coffee shop anymore. I disagree with the posters above who say there's a 90% markup on the coffee. What you're buying at Starbucks isn't a coffee, but a coffee plus the right to sit at a table and use the wifi for an hour or two. And as OP points out, at the moment, this is pay-per-use: when I need a place to sit down for a bit, whether in my own city or some other city, or whe…

Out here Starbucks has been building/opening a ton of new places lately, some of which are replacing old ones. The new ones are strictly outdoor seating.
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