Great article. I would have spent 99 cents to read it.
Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy
111–120 of 207 posts
Re: Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy
#112Horrifying. 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.…
Situation in Apple App Store is actually much better then selling it via web. You could actually convince some people to buy your app for $1. Convincing people to pay for anything on the web is much much harder. A know few real-estate agents which have all their data in Dropbox but they don't want to pay for Dropbox storage and constantly terrorise colleges with Dropbox invitations so they can get some more storage.…
No. The situation on the web is the opposite. People with real business problems can readily be convinced to lay out far more than they do in apps for a year for a web page that solves those problems. Case in point: teachers who want bingo cards to build a lesson plan for a single day's biology class.
Re: Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy
#113Earlier quoted context omitted.
I'm in the US and you have all really got me curious about the Aussie coffee. I too hate Starbucks and find it quite bitterly me a pot that's been on all day). Unfortunately I just prefer Big Coffees off the shelf brand, but don't know what to try. Just that it's not Starbucks. Is there somewhere that I can order Aussie coffee from and know its actually the coffee you describe and not just branded 'Aussie'?
There's really no such thing as 'Aussie' coffee, as I doubt coffee is produced in commercial quantities anywhere in Australia, although there are local roasters. What they are referring to is coffee made by an Australia barista. Basically, coffee culture is huge in Australia, and being a quality barista is seen as a cool kind of job to have, despite the generally low pay. It's not unusual on a city street in Australi…
As an American living in Sydney: I've found it to be exactly the opposite. Sure there's a ton of coffee places, but mostly they're the same crappy $4.00 burnt roast. I suspect Melbourne is probably better, but I haven't had enough coffee there to confirm.
My speculation is that this is due to a general lack of hip/divy/young "artisan" cafes/restaurants in Australia (yes, yes, I know there are some, I'm talking purely about prevalence) compared with "hip" American cities. This is particularly true outside of the hip parts of town (Surrey Hills, mostly).
US coffee quality depends greatly on which city you're in, and the barista being a cool job is true in many places as well. The Pacific Northwest (Portland, Seattle -- despite the Starbucks black mark) has really amazing coffee shops, and they're everywhere. If you're ever in Portland, I highly suggest Barista -- http://baristapdx.com/ -- it will change your life.
Re: Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy
#114Earlier quoted context omitted.
I'm in the US and you have all really got me curious about the Aussie coffee. I too hate Starbucks and find it quite bitterly me a pot that's been on all day). Unfortunately I just prefer Big Coffees off the shelf brand, but don't know what to try. Just that it's not Starbucks. Is there somewhere that I can order Aussie coffee from and know its actually the coffee you describe and not just branded 'Aussie'?
There's really no such thing as 'Aussie' coffee, as I doubt coffee is produced in commercial quantities anywhere in Australia, although there are local roasters. What they are referring to is coffee made by an Australia barista. Basically, coffee culture is huge in Australia, and being a quality barista is seen as a cool kind of job to have, despite the generally low pay. It's not unusual on a city street in Australi…
>There's really no such thing as 'Aussie' coffee
Demonstrably untrue. Like most coffee producers, a lot of the beans are imported, some of it is grown locally. But they are hand selected, blended and roasted here in Australia and are most definitely produced in commercial quantities to be consumed here and exported as far as Korea.
To name but a few Campos, Sprocket, Lavazza.
Australia has very rich Italian and European cultural heritage which means we cultivated a coffee culture quite early on, relative to other western countries.
Re: Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy
#115Earlier quoted context omitted.
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 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 good in question (inelasticity of gas demand, in this case) leads to bad pricing as much as incorrectly estimating the marginal utility of a product to consumers.
Re: Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy
#116Wow. 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…
I would say review systems and internet research negates most of the 'gamble' involved with most app purchases. But I guess most users are just mindless consumer zombies. There are a few instances where you "wont know till ya try it yourself"... but they're few and far between with proper research. I think it really speaks to the expectation of developers here that users are expected to "gamble" on app purchases with…
> I would say review systems and internet research negates most of the 'gamble' involved with most app purchases.
Logically, it seems like it should. But a lot of apps are just good fits for some people and bad fits for others. Some people love Angry Birds, and some people hate it. For a lot of apps, it doesn't matter how many reviews you read -- you just can't tell if you'll like it or not.
I bought the $0.99 Tetris app because it was getting rave reviews. And after just a few minutes, I realized I hated it. In my experience, reviews/popularity are a very bad predictor of whether or not a particular app will be useful to me.
Re: Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy
#117Earlier quoted context omitted.
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…
I'm an Aussie coffee afficionado, and the best coffee I ever had in London was at Monmouth. No idea of the address, but it was about 5mins walk from the modern art museum, on that side of the Thames, near a food market. As if that'll help... :-)
This is the one you're talking about: http://www.monmouthcoffee.co.uk/shops/the-borough
It's very good, but you'll wait a long time on weekends.
Re: Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy
#118Starbucks was once a "new experience" for people who enjoy their coffee now. You paid to try it for the first time whenever you did....unless of course, you tried it via some free Starbucks promotion, liked it and then became a paid customer.
Re: Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy
#119Horrifying. 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.…
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…
You're missing the point in two ways
a) "Starbucks" serves in this situation as a generic term for an espresso drink of your choice. Like Kleenex or Xerox or what-have-you. When someone says "people will spend $4 on a coffee at Starbucks without thinking about it" they don't mean at Starbucks specifically, they just mean "some coffee shop that isn't 7-11 or Dunkin Donuts or McDonalds".
b) Even within the category of espresso-serving, $3ish coffee shops, the argument still applies. In a strange town (), in the absence of other reliable information, I will probably go to Starbucks because I know that I'll get a somewhat over-roasted, but drinkable, latte. If I walk into a random independent coffee shop, there's some chance I'll get an excellent cup of coffee. But, experience has also taught me that it's more likely that I'll get something that's no better, or frequently worse, than Starbucks. Similarly, if I'm out of saline or need some allergy medicine while traveling, I'm likely to grab it at Walmart, because all their stores are laid out the same and I can find what I need blindfolded. There is value in predictability in many situations.
() caveat that this applies to travel in the US, and generally for work. In various European countries, I'd bet on the random local shop. And if I'm traveling on vacation, there's value in experiencing something new and local. But, if I just want my morning coffee on the way in to the office, easy and predicable wins.
Re: Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy
#120one more point: your coffee doesn't get free update. app does.