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The cup-of-coffee pricing fallacy

blog.gingerlime.com

71–80 of 102 posts

Re: The cup-of-coffee pricing fallacy

#71
post #60

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.

That's not really what the article is about. Getting coffee is low risk. Apps are high risk. There are so many garbage apps that aren't worth a single cent and choosing the right one is very difficult.

Re: The cup-of-coffee pricing fallacy

#72

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…

Daily coffee comes with addiction (light), so even if you are used to the 5$coffee every day, you surely won't give it up for one day. It would be one uncomfortable day of crawing your coffee.

Re: The cup-of-coffee pricing fallacy

#73
post #61

Earlier quoted context omitted.

I don't think it's any more reasonable. I like coffee, but I've not bought even a 4€ cup of coffee in a few months. Actually I don't visit coffee shops a lot, I much prefer drink my coffee at home (or at work, where it's free)... Also if they argued that 7€ would be just 2 beers per month... maybe I'd still take 2 beers over some ridiculous SaaS. TLDR: I don't like subscriptions.

If you really don’t like subscriptions, then people who are considering how to pitch their SaaS services probably shouldn’t put too much weight on your opinion... Not to be rude — just pointing out that feedback from someone who is highly unlikely to purchase a type of product is less relevant. For the record, I also don’t like subscriptions, and I probably put too much weight on my distaste when pricing my startup's…

Yeah, but currently everyone seems to focus just on those few customers who like subscriptions. Nobody caters to the guys who don't like subscriptions. (Or maybe just nobody blogs about it)

Re: The cup-of-coffee pricing fallacy

#74
post #51
post #48

Earlier quoted context omitted.

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 fo…

Most people can afford a thing for price x easily. Had they never balked at price x, they would pay 20 times x and that is entirely different number.

Meaning, it is not just about comparing value of goods. It is much more about keeping strategy that is easy to remember and execute, but allows you to keep savings.

Re: The cup-of-coffee pricing fallacy

#75
post #37

Earlier quoted context omitted.

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…

Honestly, I drip-brew a pot a day for the caffeine ... and coffee flavor. Fresh grind is better, and the Espresso/French press/etc stuff often tastes better. But day after day, year after year? too much fuss. When you need a transfusion, ASAP is the best way.

The drip machine is also about $20, and lasts for about a year of daily use.

I'm suspicious of the espresso machines, though, as they reportedly leech cadmium into the coffee. Not something I want to drink all day.

Re: The cup-of-coffee pricing fallacy

#76

Earlier quoted context omitted.

If you really don’t like subscriptions, then people who are considering how to pitch their SaaS services probably shouldn’t put too much weight on your opinion... Not to be rude — just pointing out that feedback from someone who is highly unlikely to purchase a type of product is less relevant. For the record, I also don’t like subscriptions, and I probably put too much weight on my distaste when pricing my startup's…

Yeah, but currently everyone seems to focus just on those few customers who like subscriptions. Nobody caters to the guys who don't like subscriptions. (Or maybe just nobody blogs about it)

Is it just a few customers who like subscriptions? I'm not sure this is the case. I know my startup has an iOS app with one-time IAPs, but we see way more usage of our Chrome extension, which is a subscription.

I have resisted the push to make or app subscription-based, since I personally would never buy an app with a subscription. But perhaps I'm out of step with the "kids these days"? I also have zero subscriptions to Chrome extensions, and we have plenty of customers there...

Re: The cup-of-coffee pricing fallacy

#77

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 used to see older relatives post photos of very fancy meals they ate, and I thought they were being irrational/foolish. Then I had kids and realized that if you only eat out with your spouse (and no kids) 2-3 times per year, spending that much is not so crazy. If you have a babysitter, that will easily run $50, and it seems odd to spend more on that than the food/experience at the restaurant.

But to be clear, when people refer to a "nice meal" costing $50-100, they're talking about an evening of being waited upon, not just the food. What you're paying for is service, ambiance, and restaurant location (overlooking a beach? at the top of a skyscraper?). It's not crazy for someone to decide to choose to indulge by buying nice food bundled with a relaxing experience, compared with buying nice food separate from a relaxing experience (going on vacation, going to a sporting event, having a massage).

But for the record, I agree that $50-100 is an extravagant meal. I think they chose the euphemism "nice" to make it sound like the tradeoff was for something not so extraordinary.

Re: The cup-of-coffee pricing fallacy

#78

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…

5$ per month is more what I think. Or per year, or sometimes even one time fee. Like buying a mobile app for the price of a cup of coffee. I see it as, I can just skip the next cup of coffee and I've already recouped the money.

Re: The cup-of-coffee pricing fallacy

#79

Earlier quoted context omitted.

A cost of doing business is one of the most essential expenses there is.

The absurdity of an “essential price”... essential to what, class?

To doing business? Doesn't seem absurd at all. Do you think business should just land in your lap for free without having to spend anything for it? That what seems absurd to me.

Re: The cup-of-coffee pricing fallacy

#80

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.

Wouldn't that normally include drinks, tips, possible desert and service. With all that, 50$ to 100$ is common in big cities.
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