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.
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.
That's somewhat encouraging, I think. At least it seems that some of the behavior could be changed, if the right references are invoked and if people's expectations can be changed (which they can, it would seem, as free was not the expectation, even 10yrs ago).
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...