<story><title>Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy</title><url>http://www.joshlehman.com/thoughts/stop-using-the-cup-of-coffee-vs-0-99-cent-app-analogy/</url></story><parent_chain><item><author>dasil003</author><text>I&apos;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 &lt;i&gt;their&lt;/i&gt; garbage before you could throw &lt;i&gt;yours&lt;/i&gt; in.  It would be years before I could actually afford to buy a coffee from there.&lt;p&gt;Now I live in London, and as far as I can tell, all the good coffee is made by Aussies, so I can only imagine how terrible Starbucks is by comparison in your country.</text></item><item><author>andrewfelix</author><text>Well said.&lt;p&gt;&lt;i&gt;&quot;Starbucks Craftsmanship&quot;&lt;/i&gt;? Please.&lt;p&gt;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.&lt;p&gt;I would gladly &apos;gamble&apos; 99c with an iPhone developer over a Starbucks beverage.&lt;p&gt;EDIT: I&apos;m talking specifically about &lt;i&gt;Starbacks&lt;/i&gt;. Australia has excellent coffee. I&apos;m drinking a lovely Sprocket coffee as I write this.</text></item><item><author>tptacek</author><text>Horrifying.&lt;p&gt;The point about the coffee cup comparison isn&apos;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.&lt;p&gt;The point of the coffee cup comparison is &lt;i&gt;marginal utility&lt;/i&gt;: 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.&lt;p&gt;Oh, you really like Starbucks coffee? That&apos;s unfortunate, because it&apos;s pretty bad, but more importantly: you &lt;i&gt;militantly miss the point of the comparison&lt;/i&gt; when you benchmark the experience of installing a new app against the enjoyment you get from a cup of coffee.&lt;p&gt;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&apos;m an obnoxious nerd, so all I can think to do about this is yell. ARGH.&lt;p&gt;A dollar at the margin for a person with a $600 phone on a $50/mo data contract is &lt;i&gt;not an enormous gamble&lt;/i&gt;. It is a pittance too trivial for that person to even contextualize. The problem isn&apos;t that people are unwilling to give up $1 for apps; it&apos;s that they&apos;re hesitant to give up $0.25 for &lt;i&gt;anything&lt;/i&gt; online. When you start with the understanding that there&apos;s huge impedance at &quot;anything above free&quot;, it&apos;s clear why &quot;$1&quot; is not a particularly great price point, and why &quot;better strategies to motivate people to part with $1&quot; is a terrible meme to propagate.</text></item></parent_chain><comment><author>lobster_johnson</author><text>&amp;#62; Now I live in London, and as far as I can tell, all the good coffee is made by Aussies,&lt;p&gt;In New York, Swedish coffee (of all things) seems to be the up-and-coming thing:&lt;p&gt;&lt;a href=&quot;http://www.fikanyc.com/about&quot; rel=&quot;nofollow&quot;&gt;http://www.fikanyc.com/about&lt;/a&gt;&lt;p&gt;&lt;a href=&quot;http://www.konditorinyc.com/&quot; rel=&quot;nofollow&quot;&gt;http://www.konditorinyc.com/&lt;/a&gt;&lt;p&gt;No idea why. Scandinavia is exotic and hip these days, probably. Then again, a lot of new Swedish things are popping up, like Swedish pizza places (which, if you haven&apos;t had it, mostly revolves around unexpected toppings such as banana, cabbage and kebab meat).</text></comment>
<story><title>Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy</title><url>http://www.joshlehman.com/thoughts/stop-using-the-cup-of-coffee-vs-0-99-cent-app-analogy/</url></story><parent_chain><item><author>dasil003</author><text>I&apos;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 &lt;i&gt;their&lt;/i&gt; garbage before you could throw &lt;i&gt;yours&lt;/i&gt; in.  It would be years before I could actually afford to buy a coffee from there.&lt;p&gt;Now I live in London, and as far as I can tell, all the good coffee is made by Aussies, so I can only imagine how terrible Starbucks is by comparison in your country.</text></item><item><author>andrewfelix</author><text>Well said.&lt;p&gt;&lt;i&gt;&quot;Starbucks Craftsmanship&quot;&lt;/i&gt;? Please.&lt;p&gt;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.&lt;p&gt;I would gladly &apos;gamble&apos; 99c with an iPhone developer over a Starbucks beverage.&lt;p&gt;EDIT: I&apos;m talking specifically about &lt;i&gt;Starbacks&lt;/i&gt;. Australia has excellent coffee. I&apos;m drinking a lovely Sprocket coffee as I write this.</text></item><item><author>tptacek</author><text>Horrifying.&lt;p&gt;The point about the coffee cup comparison isn&apos;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.&lt;p&gt;The point of the coffee cup comparison is &lt;i&gt;marginal utility&lt;/i&gt;: 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.&lt;p&gt;Oh, you really like Starbucks coffee? That&apos;s unfortunate, because it&apos;s pretty bad, but more importantly: you &lt;i&gt;militantly miss the point of the comparison&lt;/i&gt; when you benchmark the experience of installing a new app against the enjoyment you get from a cup of coffee.&lt;p&gt;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&apos;m an obnoxious nerd, so all I can think to do about this is yell. ARGH.&lt;p&gt;A dollar at the margin for a person with a $600 phone on a $50/mo data contract is &lt;i&gt;not an enormous gamble&lt;/i&gt;. It is a pittance too trivial for that person to even contextualize. The problem isn&apos;t that people are unwilling to give up $1 for apps; it&apos;s that they&apos;re hesitant to give up $0.25 for &lt;i&gt;anything&lt;/i&gt; online. When you start with the understanding that there&apos;s huge impedance at &quot;anything above free&quot;, it&apos;s clear why &quot;$1&quot; is not a particularly great price point, and why &quot;better strategies to motivate people to part with $1&quot; is a terrible meme to propagate.</text></item></parent_chain><comment><author>andrewfelix</author><text>Don&apos;t get me wrong, Aussies make amazing coffee. The best coffee comes from a portable stall outside Sydney central station &lt;i&gt;crafted&lt;/i&gt; by a Polish Aussie using Campos beans.</text></comment>