
Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy - joshlehman
http://www.joshlehman.com/thoughts/stop-using-the-cup-of-coffee-vs-0-99-cent-app-analogy/
======
tptacek
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.

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.

~~~
andrewfelix
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 Starbucks
beverage.

EDIT: I'm talking specifically about _Starbacks_. Australia has excellent
coffee. I'm drinking a lovely Sprocket coffee as I write this.

~~~
dasil003
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 the good coffee is made by
Aussies, so I can only imagine how terrible Starbucks is by comparison in your
country.

~~~
lobster_johnson
> Now I live in London, and as far as I can tell, all the good coffee is made
> by Aussies,

In New York, Swedish coffee (of all things) seems to be the up-and-coming
thing:

<http://www.fikanyc.com/about>

<http://www.konditorinyc.com/>

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't had it, mostly revolves around unexpected toppings such as banana,
cabbage and kebab meat).

~~~
unwind
Whoa. I actually got a touch of national pride there! What a feeling! :D

Anyway, one reason Swedish coffee culture might be something that can be
noticed in NY is that we're pretty good at drinking coffee.

See
<[http://en.wikipedia.org/wiki/List_of_countries_by_coffee_con...](http://en.wikipedia.org/wiki/List_of_countries_by_coffee_consumption_per_capita>);
to get a hint about how important coffee is in Scandinavia.

Sweden is down at #6 these days, but we still clock in at roughly twice the
consumption per capita compared to the US.

And the word "fika" which the first place is named for has loads of
connotations, it's simply deeply entrenched here.

~~~
aerique
You need to remove the trailing '>' from your link (or don't put it between
angle brackets).

Going by that page perhaps I should start a dutch coffee house in NY!

I wonder if there are many Starbucks in Scandinavia? I know of only one here
in the Netherlands.

~~~
Gmo
Hum, there is more than one ... Only in Amsterdam there are at least 2 (went
there 2 days ago), one in Central Station and one not far from the Science
Museum (that I could see from the train leaving the Central Station :D ). And
no doubt there are more in the inner city.

Then there is also at least one in Utrecht Central, so we are down to 3
already.

Anyway, I know it was not your point.

Besides, as a Frenchman (living in the Netherlands), I'm not fond at all of
Dutch coffee, but hey, it could probably work in "New Amsterdam" ;)

------
crazygringo
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 fool, like I got taken in.

When the author says "Your $1 App is a Total Gamble", that's exactly the
point. And it has nothing to do with it being an app or an online purchase.
It's the same way I feel about buying a new snack for $0.99 and discovering it
tastes like cardboard, or a shirt from a new store that turns out to shrink
unexpectedly in the wash.

People hate buying things they'll regret, particularly when they're buying
blind, or have no idea of the risks. It's psychological, not necessarily
economic, but it's true. And in app stores, there's rarely a trusted brand to
rely on, or anything at all, to tell you you're not being taken for a fool.
Customer reviews tend to be worthless, and you're not going to spend 20
minutes researching a $0.99 purchase. So you just won't buy it period, because
you hate feeling like a fool. Psychologically, it makes perfect sense.

But what if the app stores switched to a subscription model? Pay $10/mo for
unlimited apps. Suddenly, no regret. Pay developers based on their proportion
of hourly usage across all phones. All of a sudden, no regret, and developers
are paid based on people finding their apps useful, instead of their ability
to convince people to buy them...

~~~
alexanderh
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 without knowing whether the app is good
or not by reading reviews, and general consensus. Thats a really exploitative
purchasing pattern to expect from your users...

Not saying there arent plenty of dumb people to pray on, but... yea.. wow. A
lot of app store developers here on HN just expect their users to be dumb ill
informed "johns" to exploit for a dollar on a gamble... That really says
something.

~~~
crazygringo
> _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_.

~~~
anywherenotes
google play (android) allows for full refund within 15 minutes of purchase. I
don't know if you bought from them, or somewhere else (maybe itunes), but you
can check their policy. It likely won't help you this time, but maybe in the
future you can just get money back.

~~~
dsirijus
I've returned and gotten a refund for most apps I installed on Play. I kept
maybe two dozen or so quality ones.

Works great since you can pretty much get the crux of the quality of an app in
an extremely short time (sometimes as little as several seconds).

------
greggman
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 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?

~~~
cwp
If I try a new restaurant and they don't bring my food to the table, I walk
out without paying. If the food is horrible, I can send it back. If I pay the
bill, I'm acknowledging that I got _something_ of value. I may not decide to
go back, but at least I'm not hungry any more. The same applies to your other
examples. If the projector malfunctions when I'm watching a movie in a
theatre, I get a coupon to come back another day.

With the app store, there's no recourse. I bought several apps that didn't
work. It's not that they weren't as good as I expected, not that they crash
occasionally. I wasn't disappointed. I was SOL, having received no value for
my money. Sure, it was only couple of bucks, but I hate being a sucker.

If the app store would let me delete an app in the first 24 hours for a full
refund, I'd buy a lot more apps.

~~~
SomeCallMeTim
> If the food is horrible, I can send it back.

You CAN...but legally, you can't walk out on the bill. Even walking out after
ordering is illegal, as I understand it. And if one thing that arrives is
terrible, then are you really going to trust that something else will be
better?

Probably not. So are you really going to walk out without paying? Most people
won't, and you would be breaking the law if you did walk out.

Google already did an experiment in a 24 hour return policy. Guess what? A
HUGE percentage of games -- GOOD games -- got bought, played for 8 hours, and
returned.

A game for $0.99 isn't intended to be a lot more than a few hours of
enjoyment. A $60 game may need at least 16-24 hours of solid content, but a $1
game is still a better value if it can entertain you for three hours. The 24
hour return policy was a stated reason several big developers refused to
develop Android games, so Google changed it to 15 minutes.

One extreme to the other. Sigh.

Regardless, this whole thread is completely missing the fact that A LOT of
good apps have demos/samples that you CAN try for free, and people __still
__complain and whine about having to actually PAY $1 for a game they can find
out for free that they like, or an app that they can find out for free works
just fine for their purposes.

AND, you can look at reviews to see if the app works. When you go to a random
restaurant, you don't get a pile of reviews pasted to its front door that you
can read to find out if it's any good. In the world of apps, you CAN see
reviews at the point of purchase.

And I hope you posted bad reviews (after contacting the app developers to see
if they could help you!) on the apps you bought, to warn others.

~~~
josephlord
I believe in the UK you can leave what you think the food was worth (down to
zero) along with your name and address so the restaurant can take you to small
claims court if they wish to dispute the value they provided.

I have heard of precisely one first hand account of this being used for a
truly terrible meal. The police were called and confirmed the dinner's rights.

~~~
NLips
Almost correct, I believe. You have to pay full price if you finish the meal,
because it is assumed you must have thought it was worth the money - otherwise
you would have stopped earlier.

------
siglesias
I used to develop apps for Dan Ariely and we would often chat about this
topic. By the latest in psychological research it's less rational than that
[1]. Additional factors:

Mental Binning— _when we think about buying a $1 app, it doesn’t occur to us
to ask ourselves what the pleasure that we are likely to get from this $1 app
— or even what is the relative pleasure that we are likely to get from this
app compared with a $4 latte. In our minds, those two decisions are separate._

Price Anchoring— _we have been trained with the expectation that apps should
be free._

1) [http://danariely.com/2011/12/25/the-oatmeal-this-is-how-i-
fe...](http://danariely.com/2011/12/25/the-oatmeal-this-is-how-i-feel-about-
buying-apps/)

~~~
walterkim
I like the article, but yeah, price anchoring is the real issue here. App
prices on mobile devices is largely a result of the race to the bottom, hence
why there's a large disparity between price for the same app on mobile and
desktop. (Assume equivalent functionality and difficulty of development.)

The coffee cup analogy is about putting the price of mobile apps back into
perspective, getting people to not feel ripped off because just they're paying
$1.99 instead of $.99.

------
mmahemoff
I think there's a deeper cause behind many of these arguments. People hate to
feel ripped off, to a degree that is highly irrational if you assess the
impact in purely utilitarian terms. Even a billionaire will feel a bit shitty
after paying $0.99 for a lemon.

There are various reasons why this happens. Partly it's the fact they wasted
time researching and purchasing the app, and people's time is usually more
important than $0.99 or coffee. Partly it's an innate sense of justice. But
the main factor is that we don't like to feel that we screwed up. Even worse
if you just paid for an app before learning there's a better one that's free.

A good book that covers this is The Paradox of Choice
([http://en.wikipedia.org/wiki/The_Paradox_of_Choice:_Why_More...](http://en.wikipedia.org/wiki/The_Paradox_of_Choice:_Why_More_Is_Less);
credit Build and Analyze podcast for raising the topic a while back.)

~~~
fleitz
Yes, it reminds me of a story about a guy named Joe who spent hours on the
phone with the phone company and had the erroneous billing charges removed
saving him $11.

Joe tells his neighbour Bob of his ordeal and how he got his $11 back, Bob has
the same problem and asks whether the Joe could take care of his billing
problems with the phone company for $11, but Joe refuses insisting he isn't
being paid enough to deal with the phone company for hours.

~~~
gerts
<http://en.wikipedia.org/wiki/Tit_for_tat>

The goal is to make it not worth the oppressor's effort to rip you off.

------
amartya916
Really enjoyed reading the article (though the criticism by kineticflow about
using "Fact", seems valid to me), thanks.

For me, the two stellar points were: "The Starbucks Craftsmanship Is On Full
Display" + "App Craftsmanship Is Hidden Away".

I'd also like to add that the "Craftsman is hidden away". Apps do not connect
at a human level the same way a person selling you a cup of coffee does. Even
for mega corporations like Starbucks, at the end of the day, you interact with
a Barista or someone at the cash register. We being creatures of habit, tend
to go back to the same Starbucks (mostly), and in the process bolster this
connection. That doesn't happen with an app. You might go back to the app
every day, but there is no tangible connection with the craftsman. So what
exactly can be done? For starters, one can associate the developer's name and
face with the app. I think this is particularly important for Free apps. If
you've ever used Adblock on Safari, at the end of the setup, there's a note
that "humanizes" the app as being the creation of a person. You get to see the
name and a photo.

One of my favourite mobile apps, Instapaper, has the developer leaving tiny
personal messages during app updates. I know his name, the fact that he
recently had a baby and at some basic level it helps me connect to the person.

Does this make any sense?

------
notJim
Note: if your first reaction to this is to say: “Starbucks sucks”, please
substitute your favorite coffee shop. Magically, the article probably still
works.

~~~
joshlehman
Bingo. Thanks!

------
romey
I'm not so sure about the argument that most people would forgo the $4 cup of
Starbucks, given a free alternative. Every office that I've ever worked in
provided free coffee, and half of the office would still regularly pick up
coffee from the nearest Starbucks daily. I think there's something to be said
for

1) Crafting the "image" of superiority that people get from purchasing
Starbucks (having that nice branded Starbucks cup, rather than the crappy
styrofoam one your office provides, allowing people to order ridiculously
tailored drinks -- soy half caff with a dollop of creme...etc) and

2) Providing an ecosystem to encourage the purchase over free alternatives
(I've noticed that I'll stop at Starbucks for a snack because I'm hungry in
the morning, and pick up coffee/tea as well, just because I'm there)

~~~
notJim
Yours is a good point (and I can't fully refute it), but I'd like to point out
that the article's argument is that _Starbucks_ doesn't offer a free
alternative. Surely if Starbucks offered a free alternative, people would
choose it instead, as long as it provided a reasonable number of the benefits
the paid version does.

To bring the analogy back around to apps, let's say there was an Instagram app
that costs $9 and a notJimstagram app that does something similar for free.
Instagram = Starbucks, notJimstagram = your office coffee. Most people would
buy Instagram, because Instagram is well known, has a strong brand, etc.

On the other hand, suppose there was the $9 Instagram and the free Instagram.
In that case, most people would probably choose, or at least start with the
free Instagram.

------
CKKim
Hi Josh, interesting read. I noticed the following typos:

"Great software masks it’s complexity"

"Package it such that it shows off it’s craftsmanship"

"I don’t expect it to even last beyond it’s last drop"

"Its like an infant child in that regard"

~~~
CKKim
I've been downvoted, so could someone set me straight on the etiquette for
pointing out errors here please?

The original article gives only a Twitter account for contact info, the
submitter of this HN post is the same as the author of the original piece, and
my comment above is 251 characters.

~~~
mmahemoff
Well, people don't ye olde typo corrections, but seems OTT to downvote this
when comments are closed on the post.

~~~
jacalata
^people don't like

------
mc32
I get the point, but I think the analogies are a bit artificial.

"Starbucks is a trustable experience." The assumption is that all people all
the time buy known brand coffee. From my own, I know I walk into coffee shops
I have never been to before. Sometimes good, sometimes bad. Even at Starbucks
there are times I ask for decaf and get caffed coffee, or other times, the
green tea latte is just not mixed right, or the milk was a bit on the old
side, etc.

"Starbucks (or any known brand coffee) has no free alternative." Yes there is,
it's water. Or, if you're looking for the substance of coffee, then there
certainly are cheaper alternatives --Jolt, or no-doze, etc. Or there is also
just plain regular non-espresso coffee for a quarter of the price, or office
coffee.

"Apps can be a gamble." Trying a new flavor of coffee drink can be a gamble,
but given that Starbucks and other introduce new drinks, someone is taking the
chance on unknowns. Well, it's trusted! Sure, but as you know, people will try
stuff and will go back to what they always bought. Still, they're willing to
forgo $4 to try something new which may or may not suit their palate.

PS. For example, I really doubt people research new flavors before buying a
new espresso drink combo but apparently they are willing to devote massive
amounts of time and opportunity cost to research a dollar app. It's very
lopsided and strange.

~~~
dredmorbius
You're taking "Starbucks" too literally. Consider _any_ tangible branded good,
even if it's your local corner florist or a gas station.

Tangible goods are largely non-free. The alternative to a cafe beverage is
either one from a competing establishment, or one you make yourself (I'm
considering water and coffee to not be directly competitive, YMMV, I don't
drink decaf).

I think you're understating the gambles involved in technology products. Or
maybe I'm just overly risk-averse.

~~~
mc32
Hmm, looking back, you're right. I missed the forest for the trees.

I guess then, the question is why people find it natural to pay for tangible
goods like coffee (a temporary good, but physical), a movie (an experiential
good, also ephemeral and not physical) which by the way can be either good or
mostly poor, a hammer (an extremely re-usable good and physical good)
preventive care (is this tangible? not physical, anyhow) but when it comes to
SW, people, depending on platform, perhaps, just don't want to pay, even if
it's a nominal amount and go to extraordinary and disproportionate lengths to
scrutinize the purchase taking hours perhaps researching an insignificant (in
dollar terms) purchase.

------
jgroome
Sorry for going off topic, but...

>In short, I know what I’m getting for $4 and I’m getting that same experience
every time I hit the drive thru.

Drive-through Starbucks? America, you are way ahead.

Also, is $4 the norm for a cup of coffee? Is that standard filter coffee,
latte, or one of their elaborate coffee-based concoctions? In the UK Starbucks
will sell you a standard no-frills coffee for £1.50-ish.

~~~
emef
$4 drinks are usually the sugary/milk filled drinks like a mocha. I think drip
coffee is like 2 bucks or so at SB.

------
rhygar
This seems like a poor argument for being cheap.

"Starbucks Coffee is a Trustable Experience" Not true - I've had mixed results
depending on time of day and what barista is making my drink.

"Your $1 App is a Total Gamble" Nope. You have every opportunity to read the
reviews, look at screenshots, use Google, etc.

"Starbucks Has No Free Alternative" and "Free Apps Are Often A Great
Alternative" I'm not sure how this matters - if you're cheap, it doesn't
matter how good the app is. Do you tip waiters? After all, the alternative to
tipping is great - you get to keep your money!

"Starbucks Craftsmanship Is On Full Display" Not really. I don't think anyone
would agree that "craftsmanship" goes into making a Starbucks drink.

"App Craftsmanship Is Hidden Away" Like I said before, you have ample
opportunity to read the app description, check out app store rankings, read
user reviews, and look at screenshots.

~~~
dredmorbius
Screenshots and reviews are very, very limited channels of information.

Reviews can be gamed, even when they're not, the ratings provided are
typically highly inflated or simply binary (people give very high, or very low
ratings, few in the middle). While descriptions _can_ be useful, in practice
most are not ("works great", "does everything I wanted" -- doesn't tell me
"... for what" or "... and that was ..."). Negative reviews are often more
useful (they're generally specific as to faults), but even then, as apps
change over time, it's not clear what reviews relate to the current state of
your app (Starbucks generally doesn't radically change its coffee composition
from week to week).

Screenshots show a static view of an app but not its flow, responsiveness,
accuracy, stability, privacy policy, and a whole slew of other issues.

The best way for me to judge software is to use it. Often for a prolonged
period of time.

------
angrycoder
The analogy I like to use when people under price their software is "When you
price you apps like toilet paper, don't be surprised when most of your
customers are shit and your whole business ends up in toilet.

~~~
mmariani
Thanks.

You managed to say it all better than I did somewhere here.

Let's just hope the message gets trough.

------
pksekine
"Is There Hope for the Paid App? Sure there is. Just do what Starbucks does:
Build an app experience that’s unique and doesn’t feel easily replicated."

I'm not sure Starbucks does this :-) Overall a pretty good acticle.

~~~
throwa
The truth is the that the bar was set very low for apps by Apple in order to
commoditize the apps being sold. In economics if you can commoditize the
complements to your product, then you can sell your own product at premium
rate.

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.

------
jsaxton86
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
proportional to how many times you have used the application.

I like this approach because it users could try out my app risk free, but
those who want to freeload off of my hard work would be inconvenienced enough
where I think I could manage to convert a decent percentage of free users into
paid members. Plus, the user can still use the app, but each time they use it
you get a chance to upsell them, which you don't get if you just lock them
out.

~~~
jsaxton86
Also, by the time the user is willing to spend money on your app, they're
hopefully willing to pay more than 99 cents.

------
brackin
This is how I'd fix the problem, create an app that reminds one to avoid
drinking a coffee. <http://i.imgur.com/FkNSU.png>

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

------
robomartin
Coffee is an addiction for a lot of people. A routine you simply repeat day
after day. I used to drink several cups of coffee per day for years. Went
cold-turkey one day several years ago. I haven't touched it since. I realize
this isn't the case for all.

Some truly like to have coffee in the morning. I get it. The discussion is
about comparing the purchase of a daily cup of coffee with the purchase of
software on a daily basis. To me this is simple: Create an addictive software
product and you'll have your daily purchases. Hard to compete with a stimulant
though.

------
mmariani
In the last few days after I woke up, I picked up my iPad, and I started to
see all these posts trying to figure out what's wrong in the app business.
This looks like random debugging more than anything else. Seriously, stop.
Please, just read some business books, talking about like say the 4Ps, and
then try to figure it out.

We're over thinking the problem, and the cup of coffee analogy is a perfect
hit, it is a pricing issue. We as developers don't know how to price our
products. Just search HN and see how many posts are talking about pricing
experiments.

To the post. It mainly blames three areas: customer experience, free/paid
issue, and craftsmanship. Which in business talk translate to product,
pricing, and promotion.

We first tried to fix this mess by cutting down the price of our products.
Things didn't work, sales still going down. And what did we do? Rinse and
repeat. We kept doing that until we reached the bottom price, which now seems
to be free. Newsflash, the problem stills there.

Worse, to stay in business the only option we had was to keep cutting down on
other areas. The candidate picked for the next round of random debugging was
the product itself. Quality development costs money, so product quality had to
suffer. As a result we've got this endless sea of crapware we see in the
AppStore and elsewhere.

That has led to another round of random shooting at business bugs. The next
victim is promotion, or in other words, software craftsmanship, which is an
attempt to fix the image problem caused by the race to the bottom. It won't
work! People don't care about all the sweat and tears that we put into our
work, they just want to save money. And thanks to us, they're all doing that.

In the end the problem remains, and we still have to go the the source in
order to make the right decisions to fix this mess. The shareware business
model sure would be an easy fix, but it won't happen. Another solution, if you
aren't in SAAS or IAP, is to raise your prices and pull out the free products.
Some developers have done it and they have gotten good results.

Finally, people spend four bucks on a cup of Starbucks coffee because they
need the kick to wakeup and go about their life. If you figure an app to do
that, please don't sell it for one buck! It worths more.

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

~~~
smashing
To be fair the author is condescending to the people who read the article,
which the author labels as "the internet".

From the bottom of the article:

> Comments are not currently enabled because the internet has not yet learned
> how to deal with the ability to post comments. Its like an infant child in
> that regard. - Josh

------
tripzilch
I don't know but, I can hardly ever justify spending EUR 3.25 (~$4) on a cup
of Starbucks coffee. When I can spend EUR 5.00 on a bag of really nice beans
that'll make me many many really NICE cups anywhere I bring my filter-holder
and have access to an electrical outlet (for the grinder and water-boiler).

In fact I really _hate_ spending that money on a single cup of coffee since
even in the rare case when it's pretty good that merely means it's "almost
just about" as good as what I brew myself and the expense puts such a damper
on the enjoyment factor I might as well not bother.

But then, I'm probably one of those stereotypical cheap Dutch bastards :-P
(that happens to brew a really kick ass coffee)

------
dinkumthinkum
I disagree. I think this is completely wrong. Software didn't use to seem
expensive at $0.99. Once enough people agree to low-ball at bargain basement
pricing, consumers start to get the idea "so good software should really be
like $0.10 bubblegum."

By the way, Starbucks is not a "trustable experience" per se. Also, the point
is about frivolous spending, many people are willing to plop $5 bucks on a new
snack at the grocery story, not knowing how it tastes or not, but not willing
to pay anything for software. I think the author is searching to make some
point but defining some concept called "trustable experience" but I'm just
non-plused.

------
nickzoic
I'd like an App Store with a "if you delete it within X days you get an
automatic refund" model. That would make buying apps risk free and refunding
them hassle free, without the annoyance of having "Lite" vs "Full" versions.

~~~
Tichy
Doesn't Google Play work like that? The rebate period might be a lot shorter
though, perhaps even minutes. I think they started out with a day but it was
exploited too much.

~~~
gergles
It is 15 minutes now. (Which is far too short to even begin to use a lot of
apps like games that download tons of additional resources without mentioning
it in the app description.)

------
xyzzyb
The Starbucks coffee cup also has a definitive endpoint. I buy the coffee, I
enjoy it, the end.

When I buy your amazing app v0.1 I'm also signing up for a time investment of
unknown quantity. At the very least I will have to wait for it to
download/install, start it up, figure out how to use it, evaluate it, and
delete it if it sucks.

Rovio can release Angry Birds N and it will be a hit because that time
investment has already been validated and quantified. I liked Angry Birds N-1,
these screenshots of Angry Birds N look similar, I will probably like Angry
Birds N.

------
therandomguy
While good points, these counter arguments are not strong enough.

Trustable Experience: Most people make many transactions in a week that are
not trustable. The lower the price the lower the hesitation. $0.99 is as low
as it gets.

Free alternative: For many transaction higher than $0.99 there are free
alternatives. Newspapers, magazines all have free substitutes online. Still
people spend on these.

Craftsmanship: True for Starbucks, not for majority of transactions. Maybe be
not even... most people are staring at their phone anyway waiting for their
coffee.

------
raldi
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?

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

~~~
raldi
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.

------
RileyJames
$4 Starbucks coffee is a gamble imho

~~~
mmarcon
Not a gamble, really, just the certainty that that $4 coffee will suck, no
matter which street, city, state or country you find yourself. But this is not
about Starbucks.

~~~
Foy
It actually is about Starbucks, not the coffee or the price.

It's about you knowing that Starbucks is Starbucks no matter which street,
city, state or country you find yourself in. Whether you love or hate it, it's
at least consistent.

That's why it's not a gamble.

------
PaulHoule
Uck.

Starbucks sucks.

If you're in New York or San Francisco it's true that Starbucks has chased
away the independent coffee shop and you might think it's a good cup of
coffee.

It ~was~ a good cup of coffee 15 years ago, but now every population center
with 50,000 or so people has an espresso bar that puts Starbucks to shame.

The exception is a few big cities that Starbucks put up a store every half
block or so, probably to make Wall Street investors think that every site from
Cinncinnati to Omaha is stuffed with them.

------
daveman
Is it just me, or is it kind of odd that he titles and begins the post with a
plea to "Stop Using the Cup of Coffee vs $0.99 Cent App Analogy" but then
proceeds to totally use Starbucks as an shining example for how to run your
app business (and at the end he even says "Just do what Starbucks does") ? By
the end he's promulgating that people should adhere to the analogy by taking
lessons from Starbucks.

Maybe I'm being pedantic but this seems like a contradiction.

------
rgraham
Does anyone think that 'Starbucks' or 'Pay me $1' are great signals for
Craftsmanship?

I know plenty of office environments with free coffee. There is your
alternative, but it isn't relevant. People buy experiences. You go to
Starbucks because you like the experience. The terminology. The chatty
baristas. The drive-thru you can complain about with your sympathetic co-
workers. They could probably charge twice what they do and keep a big fraction
of their customers.

------
chollida1
The big reason the cup of coffee vs app analogy doesn't hold is that my iPhone
really only has space for about 30 apps.

I'm a big music/podcast listener so I only afford enough space for about 30
apps. For a $0.99 app to be useful it has to has to beat out apps like Shazam,
kindle book reader, bloomberg anywhere, evernote, etc.

The likely hood of an app at any price doing this is pretty low.

For me this is why the analogy doesn't hold. Price has nothing to do with it.

------
Too
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!"_

------
AznHisoka
For a lot of people, a cup of Starbucks also feels like a "must-have". We all
feel groggy in the morning, and spending $4 for coffee isn't a lot if it helps
us survive the day.

An app on the other hand, most of the time doesn't give us that same feeling.
It's more of a nice-to-have, or nice to play with once and then forget. If
it's an utility you use everyday like Evernote, it's different of course.

~~~
smacktoward
That sounds less like an argument against coffee analogies and more like an
argument for making apps that are actually useful.

------
anywherenotes
Although I agree with much in the article, I just want to point out that
google app market has a return policy of 15 minutes after purchasing an app.
So you can return it. I don't know if Starbucks offers refunds (I'm sure they
would if you make a big deal of it), but apps are not a total gamble - you
have the 15 minute window to get your money back.

------
Udo
No, I don't think I will stop using it. It _is_ a good analogy because it
addresses the unnecessary tradition of cheapness related to getting anything
online even though many of those online things do provide more (and longer
lasting) value than a cup of coffee. It's still an analogy, it has obvious
limitations, but it's not a bad one.

    
    
      Fact: Starbucks Coffee is a Trustable Experience
    

Coffee isn't specific to Starbucks, and though I admit given the choice
between reasonable alternatives I'll choose Starbucks by default, that still
doesn't mean the experience of sitting in any coffee house is even remotely
consistent. Location matters, clientele matters, it matters if the staff has a
bad day or not. And in reality, no coffee house experience is 0.99 cent - it's
5 bucks or more in practice.

    
    
      Fact: Your $1 App is a Total Gamble
    

It is a gamble but not as much so as, say, trying out a new coffee flavor, a
new kind of pastry, a new pizza delivery service, or a million other new
things you don't know anything about until you give them a spin. With apps, at
least there are screenshots, feature lists, and reasonably reliable
testimonials. With anything new, there is a risk. If I stick with the old
stuff, I might miss out on something great. If I take a risk and explore, it
might not be as good. It's a gamble.

    
    
      Fact: Starbucks Has No Free Alternative
    

Nothing is really free. Everything costs resources to make. The price you're
paying in the app store is just one aspect or this. But sure, the closest
physical world analogy would be bargain-hunting, which some people spend
_considerable_ amounts of energy on. In the software world, there is also the
danger of confusing "free" apps with open source apps, that would be another
thing entirely.

    
    
      Fact: Free Apps Are Often A Great Alternative
    

Not every app idea is worthwhile. In fact, I posit that most of them are not.
For stuff that is _really_ obvious or trivial, free is of course the best
alternative. "Free" is not a bad thing per se. It's just that some things do
cost money to make and a lot of times, app developers need to make a living as
well. In these cases, "free" simply doesn't work in the long term. However, I
would argue that app developers are not primarily competing with "free"
rubbish apps, their struggle is to get the customer to engage at all as
opposed to doing nothing.

    
    
      Fact: The Starbucks Craftsmanship Is On Full Display
    

Granted, not all app stores do a good job of making stuff discoverable - but
in my opinion, they _do_ have sufficient UI provisions for showcasing the
detailed workings of apps. I would argue that apps are in fact on full
display. If customers are wise enough to make good judgement calls is another
matter entirely, but the same dilemma applies to food products actually.

    
    
      Fact: App Craftsmanship Is Hidden Away
    

Customers don't care how complicated your app is, the same way they don't care
how much craftsmanship goes into making good coffee. Both processes are not
generally known (or even of interest) to the average customer.

~~~
dsr_
Fact: You're already addicted to coffee.

Odds are good that if the Starbucks you go to regularly closed, and there
wasn't another one conveniently close by, you would go to that coffee shop on
the other corner. Coffee is a good with proven value to the addicted.

It's also highly substitutable. Some people really insist on the specific
order that they've worked out in mind-numbing detail, but most coffee drinkers
are happy if it's good enough, hot enough, and can be easily doctored to their
preference for dairy and sweetener.

------
jdechko
There's another half of this argument though, and that is the people who
complain that an app cost's $0.99, saying instead that it should be free. No
one is standing outside of Starbucks protesting that the coffee should be
free. Most times that I hear the app/cup of coffee analogy is in response to
this complaining.

~~~
Foy
Anyone who argues that because it costs $0.99 it should just be free isn't
worth debating with.

On the other hand there are documented cases where charging more like $9.99
instead of $0.99 increase sales because the higher costs increases it's
perceived value. People are familiar with the saying: "you get what you pay
for."

------
m3mnoch
additionally, a large part of the problem stems from economic scarcity.
digital goods are infinite while the cup of coffee at [insert your local non-
starbucks coffee shop here] is a finite good.

when the average marginal cost drops to zero (due to all the usual
bootstrapping-style content here on hn), so does the average price --
artificial scarcity won't alter that fact in the consumer's mind. so, it's
really the value you perceive as coming from your infinite good that actually
drives things like app pricing.

if the average price of an app is free and people are willing to pay $0.99 for
your app, well, that's what it's worth. if you're not happy with that, push up
the price and test out what the market will actually bear.

m3mnoch.

------
phil
The operative difference between buying cups of coffee and paid apps is
actually this:

If you try to spend $50 on cups of coffee you'll quickly become twitchy and
have to stop, but if you keep pressing the Buy button in the app store you can
easily get the thing done.

------
tayl0r
Nice argument. I hadn't thought of it like that before but I think it makes a
lot of sense.

~~~
Nux
It was kind of obvious, really.

Oh, and I hate $tarbucks.

~~~
tayl0r
Yeah, it is very obvious in hindsight.

------
adetayo
Starbucks 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.

------
potkor
Paid software just has a bad emotional association. People are usually goaded
into paying for Windows/Office and antivirus software, not exactly rewarding.
Games are an exception but people don't think of them in the same category.

------
dredmorbius
There are a few more stumbling blocks to purchase as well:

\- 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.

~~~
zmmmmm
Yes, the point here: the actual non-monetary "cost" of a purchase to many end
users is much higher than 99c. I would say personally that the cost of any app
I have to purchase is $2-3 at least. Therefore all that pricing the app at 99c
has done is brought the cost down to the floor imposed by other factors.

So app developers need to judge and price their apps comensurate with the real
"effective" cost the user is going to pay anyway to install their app. Pricing
less than that, or at least deluding yourself that pricing less than that
gives you a competitive advantage, is pointless and sometimes
counterproductive (in the absence of other information I will judge the
quality of your app partly by how it is priced).

~~~
dredmorbius
You're understating the personal cost of a purchase by a couple of orders of
magnitude. How much time does it take for you to make an assessment of product
quality? What's the cost of your time? What are the available alternatives
(where "failure to purchase" is in fact an option, and the default mode)?

------
webwanderings
In order for you to sell your app like Starbucks, you have to have Dunkin
Donuts, ..... (add the rest of the coffee shops) as well.

You can't be a stand alone Starbucks in the market. It wouldn't work.

------
debacle
This article went off the rails pretty quickly. The core argument is "Your app
might be totally shit and I might not find out until I buy it," which can also
be true of coffee.

------
pbreit
I think another barrier that growing is how broken app mgmt is on iPhone and
even more so on Android. I don't download free apps because I don't want the
clutter.

------
michaelhoffman
I don't even drink coffee. It's always strange when people say that I should
spend my $4 on their app instead because that $4 doesn't even exist.

------
mh-
if the grownups could hide all of the comments here about your feelings
towards Starbucks, your insightful coffee preferences, and other inanities..
this could have been an interesting thread to participate in.

------
jbrodkin
Great article. I would have spent 99 cents to read it.

------
noconflict
Says the hipster from Portland?

------
sharingancoder
Agreed! Way too overused!

------
tuananh
one more point: your coffee doesn't get free update. app does.

------
bicknergseng
I'm having a hard time finding a part of this post that I agree with. I
understand and also think there is a problem making an apples to apples
comparison of digital and real goods, but let me step through these arguments:

"Fact: Starbucks Coffee is a Trustable Experience"

So the argument here is that brand weight translates into actual value. While
this is true across the consumerist landscape, there now also exists these
things called reviews. They enable people with no knowledge of something to
make a reasonable decision based on the experience of others. For example, I
would be willing to pay more at a well reviewed coffee shop than at a
Starbucks. For me, reviews always trump brand value.

"Fact: Your $1 App is a Total Gamble" First problem: the logic that x was bad
so y must be bad as well is flawed. No one would have Starbucks, hate it, and
hate Peet's Coffee by association. Now, it would be reasonable to assume that
someone could be turned off by Apps in general the same way someone could
dislike coffee, but that makes this whole argument comparison anyway. Second:
you're making the same mistake arrogant people make when they write off buying
a lotto ticket before a big drawing. Yes, odds of winning might be low
(staggeringly low in the lottery, much less so in buying an app), but the
potential gain far outweighs it and the barrier to entry is also next to
nothing. You might buy a $1 app and have it be worthless, but it also might
give you 30 hours of playtime or speed up your tasks by 10 min a day or
something wonderful. If it's worthless, you're out a dollar. I'll miss that
single dollar... I could have travelled back in time to the 80s and bought a
candy bar.

"Fact: Starbucks Has No Free Alternative" Yes they do. Taste tests. But this
is harder to argue against, and deserves another debate altogether. If someone
provides a better service/app for free, by all means use it. It works for open
source, less so for people trying to turn a profit. Expect a paid version to
come along that trumps it.

"Fact: The Starbucks Craftsmanship Is On Full Display" Seriously wtf. "The
feeling says “lots of work went into this magical liquid pick-me-up”." And
apps grow on trees? What an ignorant statement. What do you consider the
screenshots and YouTube videos of applications? Whether you meant to or not,
you have managed to say that you think it takes far more work to make the same
cup of coffee your home coffee pot makes than it does to build an application.
"How often have you heard people say “I could have made that app, if only I’d
thought of it first”. Or “that’s so simple, I can’t believe its been so
successful”." I don't think I've heard anyone say "I could have made that,"
it's far more likely to hear "I thought of that first." To that I say, "If you
guys were the inventors of Facebook you'd have invented Facebook."

Yes, perhaps there is a problem with comparing a cup of coffee with a $1 app.
But the problem is not that Starbucks is more valuable than some individual or
that a single app developer is to blame for the quality of all software. The
problem is that we have allowed computer science to become a black box in our
society. It's far worse than even math's "I don't need to know this because
I'll never use it." The only people who have any idea of the time and effort
involved in software creation are the people who create software. You call it
"showing craftsmanship," but I call it changing our damn society to stop
trivializing things that take massive amounts of effort while glorifying the
ones that take little. The solution is simple: make computer science a
mainstay of primary and secondary education. Reading, writing, arithmetic, and
computers.

TL;DR: The trivialization of the effort involved with software development is
the fault of society and not the fault of software developers.

------
franzus
> Is There Hope for the Paid App?

Yes, there is. But not on a market where $2 is a premium price. If you want to
make a living from software products you should stay away from mobile.

At least it plays out well for Apple who wanted to commoditize software for a
long time.

