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The cup-of-coffee pricing fallacy

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Re: The cup-of-coffee pricing fallacy

#51

Post by OJFord »

hsitz wrote: post #48
richk449 wrote: post #43

Article misses the fallacy of the comparison. If I buy a cup of coffee, I get my end of the bargain immediately* and no further commitment on my part is needed. For most saas offerings though, I’m basically committing to a regular payment in perpetuity. Usually if I stop paying, I not only lose the immediate benefits, but also whatever I have put into the app in the time I used it. Even if it is just storage, if I ca…

I think the article did discuss your point, "But [with a cup of coffee] nowhere am I asked to 'subscribe' to anything. I buy it, enjoy it, and that’s it. I’m not committed to buy another cup ever again." Maybe you wanted him to emphasize that particular aspect more.

I actually do 'subscribe to coffee' though; I get beans delivered by https://pactcoffee.com (UK only I think).

I can't recall the keyword for this in the realm of economics, but it's a weird thing to compare 'good value' across sectors. I do it quite often, wonder why I think X is such a rip-off when I won't even blink at Y - perhaps for that reason I've never had a problem with coffee-currencied pricing.

At least for consumables (coffee, groceries, SaaS in the sense that even if you don't consume a quota you consume a timeframe) I think there is value to be had in comparing their relative value, but only secondarily to comparison against something of the same type of course.

Re: The cup-of-coffee pricing fallacy

#52

Post by kaslai »

OJFord wrote: post #47
nunez wrote: post #29

I hated this assumption too, but for different reasons. First, the price for a plain old cup of coffee at Starbucks differs from region to region, but it usually normalizes at around $1.80 (taxes included). Refills are $0.52. While, yes, Starbucks’s coffee-based offerings (like lattes) are more expensive, coffee from Starbucks is quite cheap and VERY consistent (and cheaper than at a mom and pop coffee shop). Second,…

> First, the price for a plain old cup of coffee at Starbucks differs from region to region, but it usually normalizes at around $1.80 (taxes included). Refills are $0.52. That sounds really cheap, or what's a 'plain old cup of coffee' - does Starbucks sell filter coffee over there?

Yeah, around me you can get simple drip coffee from Starbucks for about 1/2 to 1/3 the cost of an espresso based drink. Last I was there, I think the biggest drip cup they offered was around $2.30 and the smallest was about $1.50. It's been about 3 years since I actually got a drip coffee from Starbucks so the prices might be slightly higher now.

Re: The cup-of-coffee pricing fallacy

#53

Post by gvjddbnvdrbv »

OJFord wrote: post #47
nunez wrote: post #29

I hated this assumption too, but for different reasons. First, the price for a plain old cup of coffee at Starbucks differs from region to region, but it usually normalizes at around $1.80 (taxes included). Refills are $0.52. While, yes, Starbucks’s coffee-based offerings (like lattes) are more expensive, coffee from Starbucks is quite cheap and VERY consistent (and cheaper than at a mom and pop coffee shop). Second,…

> First, the price for a plain old cup of coffee at Starbucks differs from region to region, but it usually normalizes at around $1.80 (taxes included). Refills are $0.52. That sounds really cheap, or what's a 'plain old cup of coffee' - does Starbucks sell filter coffee over there?

Starbucks sells filter coffee in the UK.

Re: The cup-of-coffee pricing fallacy

#54

Post by bryanrasmussen »

gnicholas wrote: post #46

This article frames the cup-of-coffee pricing comparison as: "$100/mo is less than a cup of coffee every day". But I most frequently see the comparison as: "$5/mo means giving up just a cup of coffee once a month". In this formulation, I think it's a pretty reasonable comparison, since a prospective user doesn't have to sacrifice much (just a semi-luxury item, one day a month) in order to use your service. The author…

$100 a month is less than the amount I spend on coffee, but most people seem to think I have a problem.

Re: The cup-of-coffee pricing fallacy

#55

Post by dilap »

OJFord wrote: post #47
nunez wrote: post #29

I hated this assumption too, but for different reasons. First, the price for a plain old cup of coffee at Starbucks differs from region to region, but it usually normalizes at around $1.80 (taxes included). Refills are $0.52. While, yes, Starbucks’s coffee-based offerings (like lattes) are more expensive, coffee from Starbucks is quite cheap and VERY consistent (and cheaper than at a mom and pop coffee shop). Second,…

> First, the price for a plain old cup of coffee at Starbucks differs from region to region, but it usually normalizes at around $1.80 (taxes included). Refills are $0.52. That sounds really cheap, or what's a 'plain old cup of coffee' - does Starbucks sell filter coffee over there?

They do. Here in SF, it's a bit more expensive -- a tall (12 oz) drip coffee will run you $2.25. A latte is $3.65.

All a bit cheaper than a local coffeeshop, where drip would be $3-3.5ish and lattes $4-4.5ish, plus typically a $1 tip.

Re: The cup-of-coffee pricing fallacy

#56

Post by grecy »

RealDinosaur wrote: post #11

I found it hilarious when a LA based startup compared their pricing structure to a 'nice meal' (50-100$) Not only did it insult my definition of a 'nice meal', but also made me not want to give them any more money for 'nice meals'. A nice meal is 700 calories from healthy sources. An extravagant meal is the price they quote. Similarly $5 is not the price of a coffee... It's about 30p.

I've never spent more than $35 on a meal in my life, and I like to think I've had some mighty good ones!

Re: The cup-of-coffee pricing fallacy

#57

Post by gnicholas »

bryanrasmussen wrote: post #54
gnicholas wrote: post #46

This article frames the cup-of-coffee pricing comparison as: "$100/mo is less than a cup of coffee every day". But I most frequently see the comparison as: "$5/mo means giving up just a cup of coffee once a month". In this formulation, I think it's a pretty reasonable comparison, since a prospective user doesn't have to sacrifice much (just a semi-luxury item, one day a month) in order to use your service. The author…

$100 a month is less than the amount I spend on coffee, but most people seem to think I have a problem.

If you spend this much in coffee shops, I highly recommend you try the Cash app, from Square. If you turn on the "coffee shop boost", you get $1 off of every purchase made at a coffee shop. There's a 30-minute recharge period required between purchases, and a $1.50 minimum purchase.

The sign up process is a little bit of a hassle, but for anyone buying multiple cups a day, it's probably worth it.

If you sign up via an invite code, you get $5 free (and your referrer does too). For anyone who wants it, my referral code is: https://cash.app/app/HSMSVXP, or you can just sign up at http://cash.app.

note: I do not work for the company — I just find this perk to be very handy!

Re: The cup-of-coffee pricing fallacy

#58

Post by notyourday »

pembrook wrote: post #42
NikkiA wrote: post #2

I've always hated it because it makes the assumption that everyone is at the same position in the class hierarchy - I'm poor, the last time I drank a coffee shop coffee was something like 8 years ago and even then it was bought for me by my psychologist, your 'cup of coffee a day' price just sounds extravagant to me.

But if you’re poor...you’re probably also not in the market for a $100/m B2B Saas product.

If you're poor you are not a target customer for any non-essential paid for monthly service.

Re: The cup-of-coffee pricing fallacy

#59

Post by calaphos »

kaoD wrote: post #37
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 n…

As a fan of epsresso I a absolutely agree with that fact that you should consider your own grinder and machine, but mostly for the massive increase in quality, certainly not saved costs. Even with second hand gear you are easily looking at an investment of 600 euro upwards. And as often, the sky is the limit. With the 0.3€ per coffee you mention, that's the equivalent of 2000 drinks, or 5 years of usage.

Also fresh high quality beans often result in costs per coffee a lot higher than your number. While I would encourage people to get into espresso as an hobby, I wouldn't recommend it to save on Starbucks cost.

Re: The cup-of-coffee pricing fallacy

#60

Post by SllX »

Coffee is cheap. Anytime you go to a coffee shop and purchase coffee, you’re paying for everything that isn’t coffee: lease, labor, worker’s comp, milk, sugar, taxes, syrup, whipped cream, cups, lids, sleeves, straws, equipment maintenance, etc.
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