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

joshlehman.com

181–190 of 207 posts

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

#181

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?

That happens all the time, including for coffee.

Coffee at a "high end" hotel / coffee shop etc does not cost the same as coffee at your local coffee joint --while the coffee itself has marginal difference. And there are places that sell $30 hamburgers (even $1000 hamburgers).

Same for brand name clothing etc compared to lesser known or bargain brands. The cloth / manufacturing quality in tons of cases is exactly the same, to the point of both being made in the same factory in China.

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

#182
post #95
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.…

On the other hand, if people all made such rational comparisons about marginal utility, not many people would be paying $100/month for TV channels that only allow them to watch certain shows at certain times and are full of interruption based advertising and not many people would be flushing $15 down the drain to go see a 90 minute movie instead of buying a month's membership to World of Warcraft and getting tens or…

>and not many people would be flushing $15 down the drain to go see a 90 minute movie instead of buying a month's membership to World of Warcraft and getting tens or even 100+ hours of enjoyment out of it.

So, playing some shitty game for 100+ hours instead of watching a movie would be the result of "rational comparison" of time spending? Who would have thought...

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

#183
post #175
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.…

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. Actually, you're missing the point here. Yes, marginal utility blah, blah, blah, but you seem to be assuming I have infinite marginally useful dollars to piss away each month. There is, by definition, a limit to how much disposable funds I am able to spend each…

If you gave a shit about the dollars you were going to spend for coffee, you wouldn't spend them at Starbucks, which is about 4x more expensive than the second most convenient place you can get coffee. You spend the money for Starbucks because you do not care about those dollars. Which is the point, when you get past all the noodling about what Starbucks coffee actually does for you in the morning.

Nobody who makes this comparison gives a fuck about coffee.

I haven't missed the point of this blog post. It suggests that developers should find ways to make their "craftsmanship" show in order to get prospects to part with $1. I find the idea of "$1" and "craftsmanship" sharing a sentence to be disturbing.

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

#184

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…

This happens: http://en.wikipedia.org/wiki/Jamaican_Blue_Mountain_Coffee http://en.wikipedia.org/wiki/Kopi_Luwak

The difference is that coffee is a completely different kind of market: producing a small quantity of very good coffee does not give you much help in producing it in large quantities without at a linear increase in the costs (and actually has hard limits based on growing conditions, available labor, etc.) whereas software can be infinitely replicated.

The price of a cup of coffee is useful only in establishing the threshold for how much money the average person is likely to spend without significant thought.

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

#185

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…

Melbourne, Australia appears to be a coffee Mecca. Have the Melbournites moved over there now?

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

#186

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'd say feel free to replace "Starbucks" with any other purveyor of a product you enjoy at around this price point. When I say craftsmanship what I'm really referring to is the overall brand that Starbucks (or other coffee shops) have built. A brand that says "what you get here will meet your expectations".

I'm sorry you even had to come here and point that out to people.. Jesus Christ, man. After reading your article, I clicked HN hoping for some good discussion, after all, I too have always found the coffee analogy to be a poor one, but the bulk of the comments here are people pissing over the quality of beans and who was superior taste buds.

For me, your first point sums up entirely my problem with the coffee argument -- and specifically why I spend $4 a day on coffee but rarely buy an app (though I wasn't like this initially). Even if I go to [insert coffee shop here (calm down HN)] and the coffee is a bit crappy, it still gets the job done. I won't be as happy that I spent the money on it, but at the end of the drink, I've got caffeine in my system.

The state of the software in app stores, and lets be honest here, is a bit shit. There was a popular post the other day by some guy about not being able to make a living being an app developer, and it was all "boohoo"s.. until you look at what he's made. absolute crap. A concrete calculator that looks like an Intro to Android chapter one exercise? Boy, I wonder why he's not raking in the millions. Look at the top 100 right now. It the same 3 games over and over. My issue is that when I take a gamble on your app, and it turns out to be completely awful I don't get anything out of it at the end of the day, I'm simply out a dollar -- and no, that's not a large amount of money, but it is the principle. I feel robbed of that dollar because I got nothing in return for it.

I travel for work constantly, when I first got my Android phone, I would browse through the Google Market before a flight, and then dump up to $5 on whatever game seemed interesting. I had an initial expectation of quality-- I thought up to $5 was perfectly reasonable. After, I'm going to (hopefully) get a couple of hours of enjoyment out of this app. However, I only did this handful of time before realizing that reading the SkyMall magazine is more interesting alternative to most apps.

"Those of us in app development love to talk about how ridiculous it is that people will drop $4 every other day on a cup of coffee but will not “waste” 99 cents on our hot new app."

For this to be an appropriate comparison, there would have to be a coffee shop that had the massive peaks and nulls like that of an app store. Imagine a coffee shop where getting a bad cup of coffee didn't simply mean, "of less than ideal quality given the price," and instead meant getting a black, undrinkable, coffee-ground-laden sludge that can only be thrown away after the first sip. I think people would be a little less inclined to spend money on their coffee. Only under these circumstances would I view getting a cup as holding the same "risk of waste" as buying a random app from the App store.

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

#187
post #169
post #37

Why doesn't the App Store just let people get a free 24-hour trial of any software? Or at least for any software where the developer didn't specifically opt out of offering free trials?

Don't you think it is the developer's responsibility to provide a demo/trial if they wish?

No, because it would be difficult to do without OS support. Each developer would have to write their own time bomb code, and come up with a way to protect against users just deleting and reinstalling the app over and over.

Plus the whole process would be much smoother if baked right in to the app store.

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

#188
post #126

Earlier quoted context omitted.

The interesting thing to me is that the web seems to be a wholly different market than an app store. Getting me to pay even a dollar for an app in an apps store is tough, and frankly a bad bet. On the other hand, there's absolutely no way I'd pay a dollar for any app on the web. I assume that anything priced that low is a best trash and likely malware. If you want me to buy an app in an app store, you've got pretty m…

Hmm, getting me to buy a mobile app for $1 is really hard. I consider most of them time wasting toys. On the other hand I'm perfectly happy to pay $15/month for a useful web service. And on the desktop I have no problem with paying $50+ for serious software. I guess mobile has (to me at least) that shovel ware image.

I agree. My point is that as hard as it is to get me to buy an app for $1, getting me to buy software for $1 elsewhere is just impossible. I won't likely subscribe to a service for $1/mo, either (though I might subscribe for $12/year). Really low prices in an app store make me think "this might be crappy". Really low prices elsewhere make me think "this is probably malware".

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

#189
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 has got more to do with production and consumption of a physical good as compared to a "virtual" good than anything else. The marginal utility you mention for coffee is derived from the physicality of the product - and thus I think the Starbucks vs. app comparison is invalid. The barrier to entry to create and deliver a software application is extremely low as compared to creating and delivering almost any physi…

The car example is a bit more complicated nowadays: The price of the car does not only cover the variable costs of the producer, but also has to recoup the fixed R&D. Software is only special, because the variable costs per item are essentially zero.

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

#190
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.…

Wait, what? Are people seriously arguing about the dollars and the coffee? Here, let me explain you why paying a dollar for an app or a theme or any such crap on my (full disclosure: Android) phone pisses me off and why I'm happy to go pay CLP3250 for Starbucks coffee once or twice a week.

When I go to Starbucks to buy my coffee, I get a beverage that has a certain level of caffeine I like, lots of milk, is sweet and will last me the better part of the morning. I found out that they have a product that I like and it's a repeatable experience: I go, I ask for my favorite brew and it has the same qualities that enjoy, every time.

When I look for an app for my phone, I can see screenshots of it and see the reviews and ratings. Neither of these are very reliable, for reasons I assume I don't need to elaborate here. At this point, I have the two options: 1) I can go online and do further research to try to separate truth from crap; or 2) I can install the app.

When it turns out that the app is crap after all -- or that it's good, but doesn't do what I need, or that it's excellent but the stuff I happen to need doesn't work for my phone or OS version -- I have to uninstall it and look for a better one. Or give up.

At this point, I've "paid" with my time and effort and hopes, so this is where the difference between free and $1 dollar is a lot more important than $1 dollar and $4 or $10 dollars. If the application was free, I feel disappointed and disgruntled. If it wasn't, I also feel ripped off.

But the most important part is that this whole process is repeated for every app. That is where the comparison with Starbucks breaks down: shopping for apps is fundamentally different from buying coffee at Starbucks. The comparison with movies is a lot better, because every movie is different and every movie is a gamble. Then again, movies still have more alternatives than apps: I usually go to see a movie because 1) I'm so excited about it that it doesn't matter that I'm risking a disappointment or 2) I want to spend some time relaxing with my wife and it doesn't matter that much whether the movie was good or decent, as long as it isn't godawful.

Bottom line: when it comes to purchasing apps, the reliability needs to improve. Alternately, I wouldn't mind if every paid app had a time-limited, full-feature free version. Whatever the cure, the problem has nothing to do with the quality of the goddamn coffee beans.

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