Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy • Hacker News Board

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

#141

Post by larrys » Fri, Aug 17, 2012, 4:05 AM UTC

photon137 wrote: post #115

tptacek wrote: post #108

Earlier quoted context omitted.

The bit about "coffee" and "$5" and "less than" and "marginal utility" have to do with the value of $5 to the average Starbucks customer reading things on the Internet, and nothing at all to do with the nature of coffee other than that coffee is not Important to people's lives. The point of the comparison is that coffee means so little to people that the cost of a cup of coffee is a good proxy for "how much you shoul…

Why not price the coffee at $30 then for millionaires? Surely the marginal utility of $30 to them would be similar to that of $5 to someone earning $60k? Why would one pay $5 for the same amount of gas one month and $3 in another month when the marginal utility derived from the purchase of gas is precisely the same? Ignoring the price effects induced by the supply/demand characteristics and intrinsic nature of the go…

"Why not price the coffee at $30 then for millionaires? Surely the marginal utility of $30'

If they could figure out a way to differentiate the product either in taste or image they actually could sell coffee or a coffee drink at a higher price in addition to what they are selling now.

PR wise it could prove strangely to be a bad move thought and might send the wrong message.

This is currently done with liquor to mention only one product where people pay outrageous sums of money for something that is not clearly better (taste tests of grey goose come to mind). And who would have imagined that people could charge for bottled water? Or that people would pay money for luxury ovens? Unheard of back when I was growing up.

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

#142

Post by jack-r-abbit » Fri, Aug 17, 2012, 4:06 AM UTC

kineticflow wrote: post #8

Fact: starting every paragraph with "Fact:" will make you sound condescending to readers.

Fact: he is not starting every paragraph with "Fact:"

He is presenting several facts labeled as such and then follows each fact with a paragraph or more explaining the fact. It's not condescension... it's science, man.

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

#143

Post by larrys » Fri, Aug 17, 2012, 4:11 AM UTC

tptacek wrote: post #121

photon137 wrote: post #115

Earlier quoted context omitted.

Why not price the coffee at $30 then for millionaires? Surely the marginal utility of $30 to them would be similar to that of $5 to someone earning $60k? Why would one pay $5 for the same amount of gas one month and $3 in another month when the marginal utility derived from the purchase of gas is precisely the same? Ignoring the price effects induced by the supply/demand characteristics and intrinsic nature of the go…

All manner of ridiculously expensive gewgaws are priced that way exactly in order to exploit the marginal utility of $30, or $100, or $5000 to millionaires. The problem with pricing Starbucks that way is that a huge chunk of Starbucks strategy involves there being a Starbucks on every quarter, ready for any passerby be they millionaire or middle class, and while it is notoriously easy to do price discrimination withi…

"huge chunk of Starbucks strategy involves there being a Starbucks on every quarter"

The other chunk of Starbucks strategy is that it's not about coffee.

Speaking strictly of the product (and not the experience which of course is equally important) Starbucks secret sauce is essentially that it is a "sugar delivery system".

I've yet to be in a Starbucks (and I"m in them every single day) where the majority of the beverages that are sold are not black coffee but drinks with a high sugar and even mocha content that are addictive on several levels.

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

#144

Post by jack-r-abbit » Fri, Aug 17, 2012, 4:15 AM UTC

jsaxton86 wrote: post #15

I agree with the idea that purchasing 99 cent app is a total gamble, even if I don't have much to lose. If I were writing a mobile app, I'd have a free version and a paid version. The only difference between the two would be with the free version, you'd have to look at a screen trying to get you to upgrade to the paid version, and you would be forced to look at this screen for at least X seconds, where X is proportio…

I've seen that method used on a few desktop apps.

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

#145

Post by huhtenberg » Fri, Aug 17, 2012, 4:51 AM UTC

dasil003 wrote: post #66

andrewfelix wrote: post #59

Earlier quoted context omitted.

Well said. "Starbucks Craftsmanship" ? Please. Not sure what artisans you have running Starbucks cafes in the US, but in Australia the barristers are largely low paid teenagers using un-cleaned machines and second rate beans. To top it off most of the drinks have dollop of cream or some other sugary ingredient to mask the awful quality of the coffee. I would gladly 'gamble' 99c with an iPhone developer over a Starbuc…

I've been hating Starbucks since 1993 where at my first job at a movie theater we shared a trash compactor with them, and those bastards would never press the button, so you had to stand in the smelly garbage room and wait for it to compress their garbage before you could throw yours in. It would be years before I could actually afford to buy a coffee from there. Now I live in London, and as far as I can tell, all th…

> all the good coffee is made by Aussies

Hold on a sec. What about Italians?

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

#146

Post by goblin89 » Fri, Aug 17, 2012, 4:58 AM UTC

crazygringo wrote: post #81

Wow. The negativity of the comments here to this post is astounding. I personally find this post very insightful. Just yesterday, I bought the EA Tetris app for $0.99. I played it for three minutes, and decided I hated the "touch" interface for Tetris. It isn't Tetris at all. And it pissed me off that I paid money for something useless. It doesn't matter if I paid $20 for it or $0.99. It just makes me feel like a foo…

> People hate buying things they'll regret

They also has been found to regret less when they buy the experience[0], which is what coffee in Starbucks is more about. I wonder where do apps fall—are they things or experience? Or does it depend on how you market it?

I guess it's pretty hard for an app to offer unique experience, in comparison with a coffee shop.

[0] There were studies, paper posted here on HN some time ago (“If money doesn't make you happy…”)

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

#147

Post by lamby » Fri, Aug 17, 2012, 5:09 AM UTC

tptacek wrote: post #47

Horrifying. 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.…

> This place has an enormous problem with pricing and economics

I think the worst example I ever saw was someone implying that a copy of a digital photograph should (!) only cost £0.0001 as that's the cost of hard drive storage.

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

#148

Post by Too » Fri, Aug 17, 2012, 5:10 AM UTC

I don't think many people use this argument as much to whine about bad sales but more on customers who also expect amazing support on the product.

"omg I just PAID for this app!! and you can't even listen to me and add this completely ridiculous feature that nobody in the world except me would use!!11 and btw, the alignment of this grid isn't pixel perfect and you spelled the word calendarr wrong!! i want my money back!"

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

#149

Post by shardling » Fri, Aug 17, 2012, 6:09 AM UTC

greggman wrote: post #41

Stop using Starbucks vs 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 anal…

I've seen movies that had a powerful emotional impact, even some that brought me to tears.

I've eaten meals that filled my entire body with contentment and happiness.

I've used apps that -- kept me mildy entertained? Were somewhat useful? Somehow that just doesn't seem the same.

Maybe we make those gambles on the first two because there's a 'jackpot' to be hit. It doesn't work like that with an app.

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

#150

Post by josephcooney » Fri, Aug 17, 2012, 6:50 AM UTC

erickhill wrote: post #74

mistercow wrote: post #64

Earlier quoted context omitted.

>and second rate beans Actually, the tragedy of it is that Starbucks uses pretty good beans. If you buy their brand of beans and make the coffee yourself, you can make a damned good cup of coffee. But Starbucks apparently has standardized entirely the wrong procedure for using those beans, so that the end product tastes like they accidentally dropped a bouillon cube in it.

While it is easy for some to slam Starbucks coffee for taste , the truth is nearly every cafe you go to will have a healthy business - and often perpetual lines - of paying customers. Quality is subjective, and the entire experience Starbucks brings is what the urban masses are looking for. For that matter, take a long road trip, and if you happen to see a Starbucks logo on an exit sign, more often than not you're go…

McDonalds does a roaring trade in burgers, but that doesn't mean their burgers are very good. I had starbucks coffee exactly once, and it was so bad that I vowed never to go back there again. The way to know if a coffee shop is good is to ask for a quattro ristretto with milk, or something like that. If the barista looks at you funny or hesitates in the slightest just go somewhere else.