
My Latte is Worth It - No Fun Allowed - ColinWright
http://m50d.github.io/2012/08/04/My-Latte-is-Worth-It.html
======
Udo
As someone who has used this argument a lot, both here on HN as well as on
websites to sell stuff, I feel the need to defend it now. When someone
downloads a show or a movie from Netflix or elsewhere, $2 is not a huge
investment. You'll be spending upwards of 40 minutes of your life watching
this thing and being entertained by it. If a show is worth that kind of time,
it's certainly worth $2 (or more) to support the people who made it.

In fact, as a European who regularly gets prevented from doing so, you should
count yourself lucky that _they allow you to pay for it in the first place_.
Also, I don't know a lot of places where you can even get a decent latte for
$2 anymore.

People seem to sweat investing $2 per download for anything, even if they
thoroughly enjoy the product, but they _don't even think about_ spending $10
at the coffee shop. It's that kind of disconnect people are trying to address
by invoking the latte thing.

~~~
praptak
> You'll be spending upwards of 40 minutes of your life watching this thing

I view it as investing 40 minutes of my life _on top of_ the $2. There's so
much of the free "hilarious, must watch" links to click that I won't even
spend 1 cent unless I'm damn sure it's worth it. Not that I'm defending $10
lattes anyway but they are at least 99% predictable.

~~~
mtrimpe
I also believe that it's about the lack of predictability much more than
anything else, which is why I still believe we'll end up with a form of try-
before-you-buy with variable pricing eventually.

Perhaps we should replace the "Please rate us on the AppStore" notifications
with something like:

    
    
        Did you get more enjoyment out of this app so far than: 
        * a latte ($1.95)
        * a pizza ($4.95)
        * a movie ($9.95) or 
        * a season box ($29.95)?

~~~
guard-of-terra
You have pretty cheap consumables whereever you live!

This would be amazingly hard to translate and adapt for various places where
AppStore is present (the whole world).

~~~
jeffasinger
I bet it would be pretty quick to crowdsource that info.

------
quaunaut
This almost seems like just someone being contrarian for the sake of it. I've
never used the "Costs less than your latte." spiel, but this is just a
childish thing to write.

Yes, your coffee is great and wonderful, it's what you look forward to, etc
etc. I'll first say that the majority of people don't have such an intimate
connection to coffee, so congratulations for being a special little snowflake.
I wouldn't say that with such disdain if not for the fact that you clearly
think the world of your coffee, yet can't bother to think for the extra two
seconds it takes to realize that there is definitively something in your life
you buy regularly, that is of no use to you, that you get more because it's
simply _there_.

I don't even _drink_ coffee and I get this analogy they're making. Most of us
on this site are making more than enough money to sign up for dozens of these
services per year and literally not give a shit. That doesn't mean we should,
but the fact that they are that cheap DOES imply that there is little risk
other than to your time(and if you don't have time, why are you on that site?
Or here, for that matter.).

And before anyone says, "Well if that's the only argument they have for trying
their product, it's justified.", I'd first say that I've never seen someone
stupid enough to do that before, and I'd second say that's _still_ bullshit,
because your problem isn't with the coffee line, it's that they gave you no
information as to what the product is. Come on.

This isn't to say you should try every product there is out there, but this is
such a throwaway, worthless, immature argument to make that honestly I have to
wonder how you didn't think to yourself beforehand, "Didn't the time it take
to write this cost me more than my fucking morning latte?"

~~~
why-el
I don't know, I feel the same about my morning coffee. If Starbucks started
offering coffee services online, people's perception of the product will
change dramatically. Suddenly the 2 pounds will look like a massive amount to
pay for a 'cup of coffee'.

~~~
dylangs1030
Are you sure? I'd argue buying a physical item online and having it delivered
is different in the consumer's mind than buying virtual downloads like music,
television series, etc.

One can be held, consumed, worn, looked at, etc.

The other is a potentially unbounded virtual expense. This isn't necessarily a
logical way to look at it, it's a safe way to look at it because deep down we
all know we don't feel the usual lightening of our wallets.

So, I think we naturally set a higher bar for those "virtual" purchases we
buy. There's also other factors, like us having foreknowledge of coffee.

Coffee is coffee. Even when it's shit, it's still an okay experience and you
still got your performance boost. That app though...who knows. They're all
different. It's shiny and I want to buy it, but will I really ever open it?

------
SandB0x
I always think of the total yearly cost of these little recurring payments
that are advertised and think whether that's really the best use of the money.
It's hard to reason about £2/$2 but it's easier to think about what you can
get or do with £100+ $100+.

I see a lot of friends struggle to get the money together for a summer
holiday, yet every month they're spending £9.99 on Spotify, £5.99 on Netflix,
£20 on Sky, etc. Gym memberships in London can easily run to £50 a month but
you can haggle them down, same goes for phones - friends of mine are spending
like £45 a month on their latest iPhone contracts.

Not sure what I'm getting at. Just that it's easy to make living a modern life
very expensive if you're not careful.

~~~
kablamo
Yeah $2 can add up. I like to read the early retirement blogs and would like
to somehow someday be financially independent.

The way I like to think about it is to figure out how big of a nest egg do I
need to earn enough of a return to cover that expense in retirement. For
example, I would need an investment of $18,000 which earns 4% avg annual
interest to cover my $2 daily coffee expense forever.

Its fun to think of all your expenses this way and as you build your
investments you can see how much of your lifestyle is paid off forever!

I built a little calculator to do this math for me:
<http://networthify.com/calculator/recurring-charges>

~~~
Ntrails
Following on from leaving the thread of the topic…

I've yet to see a single early retirement blog deal with the issues of
investment risk, inflation risk and longevity risk properly. It's starting to
drive me a tad potty. I will literally buy you a [starbucks] cookie and mail
it to an address of your choosing if you promise to start using "Expected
Annualised Real Return" instead of "average interest".

To be specific about the problem, a 4% annual interest over 4 years could
represent: 2%,2%,4%,8%. Those will result in something different to a flat 4%
pa. If you are going to have a withdrawal you need to work out what you do in
the 2% years, because otherwise you have less money earning interest than
expected and your gap starts to widen. Now what if the fed prints a crapload
of money to lessen the national debt load, and you are suddenly facing $10
coffees?

Anything other than the risk free rate needs to be treated properly, as a
risky return, or we are going to see in 40 years a lot of people who thought
they'd saved enough for early retirement, but it turns out they had not.

Disclaimer: I am an actuarial student working in investment at a pensions
consultancy. My living revolves around trying to quantify these risks.

~~~
kablamo
Thats a great point. I do mention it in my blog post on withdrawal rates!
(<http://blog.networthify.com/withdrawal-rates/>)

Its worth nothing that you could end up with an ever widening gap, but you
could also end up with an ever growing surplus if your early years get > 4%
return.

I don't think any _calculators_ really deal with this other than
<http://www.firecalc.com/> (which has a terrible ui -- look for the big red
'Start Here' text and then click the 'Submit' button). Building a user
friendly firecalc clone has been on my todo list for while. I'm not sure where
they got their data.

With regards to my other calculators on Networthify, I'm not sure how to
create a usable ui that reflects this reality.

Also there are at least 2 other big unknowns -- taxes and inflation. So when
I'm calculating how much money future-you will have I'm not too worried about
ROI. I agree that people need to understand these calculators are just
educated guesses. Still -- you do the best you can with the information
available. Its better than closing your eyes and not even examining the
possibilities. At least you can calculate some worst case and best case
scenarios.

\-- UPDATE

Oh hey, do you mean there is some sort of formula for expected annualized
return?

~~~
Ntrails
Of course there is upside to risk, but that doesn't really help me plan for
the future. The upside is nice holidays; the downside is penury and food
banks. It really is that bad. I would never talk to someone about their 99th
percentile asset value, but I might well show them their 1st percentile and
ask them a simple "what if"

At it's most basic savings for retirement should be considering things like
"what does a 40% drop in the market mean for me?" "What does uncontrolled
inflation mean for me?" "what happens if I live to over 100?"

In general, I obviously believe that knowingly flawed models are better than
nothing. If you want to demonstrate some of what's at risk, do a single "1 in
200" scenario. So all of the above in one example. Half way into the
projection period the portfolio drops by 40%, inflation doubles and you
increase the projection period by 20% (pulling a deterministic scenario firmly
from thin air). You can fudge the maths a little and simply output 2 sets of
figures:

Expected present value || Risky Scenario present value

The risky scenario parameters can be hidden away with the other more advanced
things, and you've got yourself a nice output demonstrating what could
conceivably happen. There are other ways, but it depends what and how much you
want to show.

More than anything though, I just want to see these calculations properly
phrased as estimates. Returns defined clearly as real (or nominal, and model
inflation). And a mention given to the cost of living longer. For a cup of
coffee, no one cares - not even I. We are talking about 80 year olds having to
find work to help account for a depleted nest egg. It's really serious stuff.

RE: Edit Annualised return is simply (1.02 _1.02_ 1.06*1.04)^(1/4). You are
calculating these things based on an expected return on assets, it is
important to be clear that it is not an arithmetic average that you are using
but a geometric one. I don’t know if you are modelling the withdrawal
cashflows (there is no need with a constant rate of interest) which is really
where this stuff starts to hit home.

~~~
kablamo
I'd love to chat with you about this stuff on email if you are interested. My
email address is in my HN profile. Thanks for the comments!

------
chris_wot
I bought Burn Notice on iTunes. Every day, I looked forward to watching the
next episode. Each episode was less than a cup of coffee.

I love my coffee, and I love Burn Notice. Possibly in equal measures.
Sometimes I watch Burn Notice while drinking a coffee. Sometimes my children
and wife join me. Life is often good.

~~~
lmm
Awesome. But I think that reinforces my point - Burn Notice was worth a lot to
you right? A random $2 thing is unlikely to give you that much joy. So "this
is cheaper than burn notice" would be a poor way to sell to you, because the
other half that's needed to complete that argument - "this is more valuable
than burn notice" - would be hard to establish.

~~~
chris_wot
Exactly - I think that's the point of the article :-)

All the author is saying is that if you are going to compare the price of one
item that gives pleasure with another, then you should ensure that they the
pleasure to price weighting needs to be the same.

Which, to be honest (when comparing TV series and coffee) for most people - it
is!

------
quesera
I think it's much simpler than that.

You don't have to get all romantic in your notions of intangible value from
lattes (or the rituals therearound, etc) to justify the idea that you're happy
to pay for something with a known reward (even if it is honestly only
marginally rewarding), but hesitant to pay for something with an unproven (and
possibly negative) reward.

Secondarily, I'd argue that when you fall back to intangibles to justify your
actions and expenditures, you should consider (just for the value of the
experiment in doing so) skipping them for a while. A month or two or three.
Sample new habits and rituals. You might prefer them.

~~~
dylangs1030
Exactly. Even the youngest generation on Hacker News has been around coffee
shops (probably) for well over a decade, and had their first purchase bought
for them by a parent or caretaker, most likely.

The app store and online purchases, by comparison, have been around for much
less time, and have the dual danger of purchases feeling like nothing because
you can't see them.

------
mcormier
This didn't render in chrome, I had to look at the source of the page to read
it.

""It's only &pound;2 - less than your morning latte."

I see this a lot, Netflix being the famous recent example. On the surface it
seems reasonable; if you would spend this much on a small cup of coffee, why
not spend it on our product instead?

But comparing to my morning latte is actually an incredibly high bar to set.
What's valuable to me, as a human, is not the coffee itself but the
experience. I spend half the morning looking forward to it, and half the
afternoon in the afterglow. There's not just a drink, there's a place to sit
and relax, free-flowing internet, pictures on the wall, and a waitress who
fakes enough interest in my day that I actually believe it. Heck, at the
caf&eacute; I'm writing from now the coffee itself is downright awful. But the
moment I sat down I felt an eagerness to write. I've got more done in ten
minutes here than in the four hours at home preceding it.

A cup of coffee might not be worth &pound;2. But happiness is, and that's what
I'm buying. If you want me to buy your thing for &pound;2, it had better bring
this much joy into my life. Otherwise, I'd rather have another cup.

[Home](/)"

~~~
kephra
> This didn't render in chrome, I had to look at the source of the page to
> read it.

This is a classical example of doing css+js wrong.

Loading the page with js disabled, shows a blank page. Disabling css, shows
the content in a nearly non readable way, with extremely long lines. Looking
at the source tells me, that its not even HTML.

~~~
krapp
It's not even as if the content is being added by javascript, it's just
markdown which gets parsed by js... the content is there, it's just being
hidden by an inline css rule. That's the most annoying thing to me, although
it's probably to prevent a FOUC.

It is html though, but not really proper html. They're sending the html5
doctype for instance, but not declaring a content type, and I think (but i'm
not certain) that the xmp tag is all but deprecated by now.

------
praptak
There is a more rational argument against "less than your latte". I cannot
drink much more than a few lattes a day. So a $10 latte might be overpriced
but at least this position in my budget is safely capped.

Not so with the $2 downloads. There's a bajillion of them not capped in any
way, so the only way to cap this part of the budget is to be aggressively
selective about what you pay for.

~~~
gyom
That's part of the problem with impulsive purchases on Steam. Paying $50 for a
game on Steam that I'll play for 100+ hours is an amazing deal.

For a game that you don't play, paying any amount is not worth it. And there's
almost no limit to how many of those I can buy using a "latte argument".

------
chrisvineup
I purchased a car once, because someone told me that I'd spend 15k on coffee
in my lifetime. As I drove away I realized I had been had. I don't drink
coffee. (This was all a lie, I don't have a car and I drink too much coffee).

------
_ak
Is it just me, or do caffeine addicts sound like heroin addicts when they try
to rationalize their addiction?

~~~
dylangs1030
Having known a heroin addict, I think it's just you.

On a less serious note, people defend coffee for several reasons, not just
because it's addictive. It's been shown to be healthy and sustainable in
moderation when it's consumed black. It's associated with productivity which
is a mental booster, as well as all the other trendy, bohemian associations it
has. And, of course, it has an immediately verifiable wake-up "kick" to it.

I don't drink coffee, but I get why people drink it. What I don't get is why
people drink Starbucks coffee.

~~~
Cthulhu_
> What I don't get is why people drink Starbucks coffee.

* Trusted brand (like McD's) * Atmosphere * Free wifi * Status * Crack or some other addictive substance added to the beverages

------
noonespecial
Apps really do bring out some strange behavior. I've seen smart people waste 2
productive working days researching which $1.99 app to buy.

Suggesting that they buy half a dozen and just delete the ones they don't like
is met with a look as if I suggested sawing their own arm off.

Predictably their phones are just jammed with apps that they never use but
keep because the "paid good money" for.

~~~
robkeane
Personally, I spend time researching $1.99 apps because I don't want to waste
my time as well as my money. It usually takes less time to read up on a few
apps than spend time using them all and finding their shortcomings myself.

------
obviouslygreen
I think the whole argument is a bit silly (and in my opinion it's no one's
business but my own what I spent money on or why, so I don't care one way or
the other about this particular point), but let's be realistic.

Assuming you want to simplify spending choices to this degree, be realistic:

If it's Netflix, it's closer to $10 a month for unlimited usage. If it's a
latte, it's more like $4 _per day_.

If you only buy one latte, and only on weekdays, that's in the neighborhood of
$86 per month.

So if you accept the idea that you should select the thing that brings you the
most "joy" for the lowest expenditure, then unless you plan to get Netflix and
then just not use it at all (or if there's nothing on it you want to watch),
it's clearly providing more value for a lower investment.

As I said... the whole thing strikes me as a bit silly and seriously
presumptuous, but it's also pretty unambiguous which option "wins" if you
consider it past "x and y cost the same" without bothering with the frequency
of payment for both of them.

------
readme
Having someone make you a latte is definitely worth the two pounds, and a tip,
as well. People might think coffee is cheap? Sure, what is not cheap is the
person who has to make you a bespoke beverage every morning. Plus milk. Plus
it's not coffee, it's a shot of espresso. Plus, you probably put some sort of
flavor in it, and it comes in a cup.

You could save money by making it yourself! And then you'd have to:

    
    
        * Steam milk, and clean the pitcher out after.
        * Grind coffee
        * Make espresso, then clean the espresso machine. If you have a home machine, that means you had to fill it with water at some point, too.

.... I could go on.

I buy my americanos at the coffee shop.

------
jumblesale
This is a favourite refrain of cheggars to guilt you into signing up. 'It's
only the price of a pint a month. Won't you give that up to save starving
children?' Well no, that's a false equivalence. Like the article says, this
argument doesn't take into account hidden value. For instance, I know I pay
over the odds for my gym membership every month and if I payed only when I
used it I would save money. But I also know if I didn't have the membership I
would spend exactly £0 a month on the gym because I just wouldn't go.

------
Kaivo
When I buy apps, games, movies, etc. I always have a simple rule to follow: 1$
per hour of entertainment. Short games that cost a lot aren't worth it, but
short games that barely cost anything are totally worth it. I never go to the
movie theater because it's way too pricey for the amount of enjoyment I get
from it. But that's just me.

The only thing on which I almost never count my money is food and drinks. I
agree that it doesn't make sense to not have problems throwing money for a
coffee that lasts a few minutes while not wanting to spend money on a movie or
an app. I get what the author says there, but the experience he describes is
only a once in a while deal for me. For instance, I buy Earl Grey tea because
it tastes good for the amount of money I put in it. It's less than $0.10 per
tea cup, which seems more than fine considering the amount of time I spend
drinking it. However, most of the time, the less pricey food/drinks I can find
often turn out to be the worst in terms of healthiness. We shouldn't count
bucks when it comes to that.

------
snowwrestler
This argument originated in the charity space, where it still works quite
well. Yeah your $2 morning coffee makes you happy...imagine how happy $2 worth
of food or clean water or medicine will make a little kid in Rwanda.

I agree that it's kind of a silly argument to use for Netflix. High-tech
services need to market themselves by their inherent value, not by comparison
to a commodity.

------
EGreg
I can tell you this much ... I didn't sign up for cable TV or any "scheduled"
programming because the value to me of wasting a lot of my time watching
"entertaining" content is very small, and probably negative. On the contrary,
the value of a latte in the morning -- if I drank coffee regularly -- would be
much greater.

Since we're on the topic, I would like to point out that drinking coffee in
the morning -- while by itself not harmful -- may be a symptom of a harmful
roller-coaster schedule where you have to rely on substances to wake yourself
up throughout the day. With a healthy schedule, you may as well try apples and
an extra 10 minutes of morning exercise.

You know what would really be of a lot of value to me? Agreements between
distribution networks to get each other's content when one doesn't have it,
kind of like "roaming" for cellphones. If they had such a service, I'd pay the
premium every time I want to watch a movie one of them doesn't have the rights
for.

------
dylangs1030
There's another argument in favor of the author's point. It's true that online
purchases on Netflix or the app store are abstract and not immediately
verifiable as "good" buys, there's also the danger of overspending. The former
might actually be an intrinsic reaction to curb the latter.

I've personally seen many people buy things _just because they're shiny and
they could._ On the app store, this translated them to buying _hundreds_ of
dollars of apps just because they were 1. "cool" (i.e. never open them again),
2. well marketed, and 3. trendy. Because they couldn't feel their wallet
emptying, they just kept buying and were surprised at the iTunes receipt they
later received, shocked really.

That's an extreme example, but it illustrates my point well.

------
xanadohnt
One big difference is caffeine is a drug and having a chemical dependence is
different than impulse. I have nothing to back this up, but I wouldn't be
surprised if there's a cognitive dissonance between reasoning about a coffee
purchase and reasoning about some other product. Much of the OP's happiness,
I'd submit, comes from that caffeine rush. Caffeine (and every other
stimulant) makes you feel good and reminds you of feeling good other times
you've consumed it. I have fantastic, and specific, memories of having
espresso in Paris, Rome, and in my neighborhood. It's just not the same with
paying for, and watching, a Netflix video.

------
lawlessone
Maybe the waitress isn't feigning interest.

------
tathagata
I think that, to some extent, what we pay for are good memories. It just so
happens that physical goods today produce longer lasting and stronger memories
than digital goods. And the rapid increase in the production of digital stuff
isn't helping their cause. Of course, at some point in the future we may
actually identify strongly with and be as much possessive about our digital
things as we are attached to our physical possessions.

------
tomasien
It's like people don't understand that coffee is a drug, and a powerful one.
It has a long burn and a slow come down, so it has become an acceptable social
drug (like alcohol and nicotine) but it's still a drug.

Drugs are incredibly valuable. It's only the ease of creation for alcohol and
coffee (relatively) that makes them cheap, but if they were rare we'd pay
whatever it took to get them. Their intrinsic value is enormous.

------
anExcitedBeast
Totally off topic, I know, but why do you all still pay these obscene prices
for joe? "Expensive" bagged coffee costs 10-15 USD and makes many more cups.
It's easy to make in the office or at home, and you get to be your own quality
control. If you need the free wifi I suppose it makes sense, but beyond that
you could be paying significantly less for much better coffee.

~~~
dagw
Because it's not about the coffee, that's not what you're paying for. It's
either about the convenience of getting a cup of coffee right now when I'm not
at home, or about the experience of relaxing in a nice environment.

------
prayerslayer
This is fun if you speak German and think of the "morning latte" as
"Morgenlatte" which translates to "morning wood".

------
mquirion
This isn't a trade-off that most consumers would consider. The "it's just the
cost of a coffee" pitch is a marketing pitch for the mass market. And when the
mass market hears it, they'll buy it on a whim. Essentially the same pitch has
worked at grocery store checkout lanes for decades.

------
cafard
The late, missed, Washington book store Chapters (not related to the Canadian
chain) used to have stickers that quoted John Ruskin: How long will people
look at the best book before they will pay the price of a turbot for it.

So the pattern has been around for a while.

------
meerita
What about those who don't necessarily spend 2 or 10 bucks on coffee. I have a
Nexpresso machine in my job, we can do 200 coffees for free.

~~~
mkr-hn
Then the phrase is probably meaningless to you. I don't go to coffee shops, so
I don't know what the people using that line mean. It rarely ends up attached
to services that cost pennies a day.

------
guizzy
There's two ways of seeing it; what else can I get out of 2 pounds, or what do
I need to do to make 2 pounds.

------
fxtentacle
short and brilliantly reasoned.

------
ck2
Wouldn't saving $1000 a year instead of the ridiculously priced coffee be even
more worth it?

------
LekkoscPiwa
So very, very true. With coffee I know what I'm getting and I know it will be
good. An application usually ends up being a total waste of time. How many
applications that you bought you really use all that often?

And there is another thing, talking contrarian: many modern investors,
including Jim Rogers and Marc Faber, claim that the future is in agriculture.
This is where the big money is going to be made. There are all classical signs
of the boom market in the agriculture market: limited supply (weather sucks,
less and less water, expensive energy, lack of land, lack of farmers) - and
huge demand (6 billion people and growing rapidly). I think that IT hits the
law of diminishing returns - free apps available everywhere, or ones that cost
next to nothing. But a cup of coffee is 3 bucks. IT head it peak in late
1990s. It's still good, but it's not as good as being in agriculture. So just
thinking aloud here - it might get much worse for IT and much better for the
agriculture. I mean think about it - 3 bucks a cup of coffee? And what about
the cost of other foods? It all goes one way only all the time - up, up, up.
Farmers are going to make it big time. While we waste time for startups that
don't even get from the ground in 90% cases.

So, what about IT startups in agriculture? Anyone works in these? Are there
any?

