Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy

People try new restaurants all time spending between $10-$75 per person. They are often disappointed.

People try new foods all the time (hey look at these new nuts, this new sports drink, this new natural pasta, this new gluten free cereal)

Starbucks is a known brand. If you liked the last game made by Sid Meier you'll probably like his next one. Starbucks vs Apps is the wrong analogy.

Spending a few bucks on a movie or a meal or a drink or a snack is exactly the correct analogy. I spent $11 on several movies recently and was often disappointed. How is that different than an App? I've tried several restaurants I'll never go back to as they were mediocre at best. How is that different from an App?

People call console themselves by talking about app experience etc, and even though app experience is important, i believe experience is not why apps are sold at shitty 99cents. Apple's strategy was to commoditize apps and guess what they succeeded.

My conclusion is that there is little or no hope for paid app or any breakthrough success for the majority of app developers. It was not meant to be, because that will affect the appeal of the iphone which will in turn lead to a drop in demand which will in turn force down the price of iphone and ipads. Do you think Apple will ever let that happen?

Wake up and smell the coffee.

Then you can continue using the analogy and make sure users actually value your app.

The point about the coffee cup comparison isn't that cups of coffee are the benchmark experience for product pricing; if that were the case, my next root canal would cost $0.20.

The point of the coffee cup comparison is marginal utility: the money you spend on an expensive cup of coffee almost certainly has very little utility at the margin, because you are happy to chuck it away for a bad cup of coffee.

Oh, you really like Starbucks coffee? That's unfortunate, because it's pretty bad, but more importantly: you militantly miss the point of the comparison when you benchmark the experience of installing a new app against the enjoyment you get from a cup of coffee.

This place has an enormous problem with pricing and economics. Unlike Patrick, who really does sweat the fact that developers are making small fractions of their overall worth due to underpricing their offerings, I should be overjoyed at the fact that the biggest collection of new software entrepreneurs on the Internet hangs out at a meme generation engine for exploitable market inefficiencies. But unfortunately, I'm an obnoxious nerd, so all I can think to do about this is yell. ARGH.

A dollar at the margin for a person with a $600 phone on a $50/mo data contract is not an enormous gamble. It is a pittance too trivial for that person to even contextualize. The problem isn't that people are unwilling to give up $1 for apps; it's that they're hesitant to give up $0.25 for anything online. When you start with the understanding that there's huge impedance at "anything above free", it's clear why "$1" is not a particularly great price point, and why "better strategies to motivate people to part with $1" is a terrible meme to propagate.

- What of my billing information / what billing hassles am I opening myself up for? Considering that app purchases are frequently tied to both credit cards and your comms/telco vendor (and often other integrated services), you're putting a lot at risk.

- What respect (or lack) does this app have for my privacy? I'm very conscious of what closed-source resources I use, and even the fact that every time I'm inputting a PIN on a purchase screen (rarely, preferring cash) I'm opening myself to identity theft / fraud risk.

- What effect is this app going to have on my device stability/integrity? Again, phones, tablets, and laptops are complex devices with extensive user state. Losing this is a real PITA.

- What learning investment must I make for this tool? Will it be worth it?

Coffee, or food, or other concrete, discrete, simple, tangible goods offer a vastly simpler experience and generally (food poisoning aside) pretty minimal downside risk potential.

To throw in a contrasting physical-goods analogy: I'm adverse to trying out new wines. Why?

- I'm very aware that much of the perceived difference in wines is highly subjective, and largely market-driven.

- I don't get all that much from the experience myself. Really, Two Buck Chuck is pretty decent, though there are a few others I occasionally buy.

- The unit-cost is relatively expensive compared with alternatives (forgoing consumption, cheaper sufficing alternatives) -- $15-$25 for a moderately priced bottle, and up into the tens or hundreds if you like.

- Option overload. Too many brands and varieties, far more than I can keep track of. Even if I find something I like, odds are I'm not going to remember what it was next time I'm shopping (not just conjecture, this happens routinely).

- And a bad choice can be ... if not toxic, just really unappealing.

Upshot: I'm not swayed by the hype, I'm risk averse, the good is expensive for the utility provided. I purchase rarely, and conservatively when I do so.

I viewed the one-off small app market for PCs as pretty limiting, in the 1990s and 2000s. I see the market for PDA / mobile apps as similarly limiting.

On the computer side, Free Software utilities and a modicum of scripting / application engineering provide me with virtually all of my needs. In large part because the FS utilities aren't silos, but (often) nodes on a processing pipeline. The extensibility tools aren't yet present on mobile, though Free Software is beginning to make inroads.

While I don't think it will eliminate the paid app market, and for a large portion of the population may not (as was the case with the PC market), I suspect FS will supplant a fairly large share of paid-app opportunities. Perhaps moreso than in the PC market of the past couple of decades as FS has garnered far wider acceptance (it was freaky even in the late 1990s, it's mainstream today).

Edit: wine analog.