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Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy

• tayl0r 14y ago
  Nice argument. I hadn't thought of it like that before but I think it makes a lot of sense.
  • Nux 14y ago
    It was kind of obvious, really. Oh, and I hate $tarbucks.
    • tayl0r 14y ago
      Yeah, it is very obvious in hindsight.
• pksekine 14y ago
  "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.
  • axxl 14y ago
    Haha yeah, but they make it a convenient experience by having one (or even two) on every corner.
  • throwa 14y ago
    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.
• jdechko 14y ago
  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 14y ago
    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."
• RileyJames 14y ago
  $4 Starbucks coffee is a gamble imho
  • mmarcon 14y ago
    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 14y ago
      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.
  • Foy 14y ago
    But it's not a gamble because it's the same every time. It's high quality every time. It has the weight of a quality brand behind it. Maybe it's a small gamble the first time you buy it, but after that it's not a gamble. The argument isn't about the price of your app or their first cup of Starbucks coffee, it's about the price of your app or another Starbucks coffee. People know Starbucks; people know Starbucks coffee. It's a very stable and well known experience to regular customers. People don't know you; people don't know your software. I don't know if buying your software will actually cause me more inconvenience than convenience. (Buggy, bad UX, hard to uninstall, installs additional crap like browser plugins) That's why buying an app is a gamble, and buying coffee isn't. That's why you cant make a good argument by comparing the price of your app to the price of a coffee. EDIT: Actually I guess the $4 drinks are a gamble afterall. My only Starbucks experience is "normal" coffee. Which I guess is more in the $2 - $3 range.
• kineticflow 14y ago
  Fact: starting every paragraph with "Fact:" will make you sound condescending to readers.
  • smashing 14y ago
    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
  • jack-r-abbit 14y ago
    Fact: he is not starting every paragraph with "Fact:" He is presenting several facts labeled as such and then follows each fact with a paragraph or more explaining the fact. It's not condescension... it's science, man.
• jgroome 14y ago
  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 14y ago
    $4 drinks are usually the sugary/milk filled drinks like a mocha. I think drip coffee is like 2 bucks or so at SB.
  • heretohelp 14y ago
    ~$2 for a cup of standard joe in California Starbucks and most other places. $4 refers to the venti lattes and other sundry sugary crap. (ie, they're stretching the truth)
  • re_todd 14y ago
    I just got a coffee yesterday at Starbucks in California, the small regular coffee, for $1.65
• notJim 14y ago
  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 14y ago
    Bingo. Thanks!
• CKKim 14y ago
  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 14y ago
    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 14y ago
      Well, people don't ye olde typo corrections, but seems OTT to downvote this when comments are closed on the post.
      • jacalata 14y ago
        ^people don't like
  • joshlehman 14y ago
    Thanks, I appreciated the feedback. Fixed those issues. For what it's worth, I up-voted ya.
• romey 14y ago
  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)
  • nirvdrum 14y ago
    I've found in offices that a lot of the times the $4 coffee is just a nice reason to get out of the building and go for a walk.
  • notJim 14y ago
    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.
• jsaxton86 14y ago
  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 14y ago
    Also, by the time the user is willing to spend money on your app, they're hopefully willing to pay more than 99 cents.
  • jack-r-abbit 14y ago
    I've seen that method used on a few desktop apps.
  • gagabity 14y ago
    That's a great way of accumulating a lot of 1 star reviews very quickly.
• mmahemoff 14y ago
  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_Is_Less http://en.wikipedia.org/wiki/The_Paradox_of_Choice:_Why_More...; credit Build and Analyze podcast for raising the topic a while back.)
  • DougBTX 14y ago
    Lets take it that people are worried about being ripped off. If it was easy to return an app for a refund from Apple, would you expect the baseline $0.99 price to go up?
    • crazygringo 14y ago
      I totally would. I purchased Dark Sky a couple weeks ago on the recommendation of a friend. I thought the $3.99 price tag was way too steep for what is mostly likely another crappy app, and I would never have bought it if my friend hadn't sung its praises. And it's now one of the most useful apps on my phone, and if it had been a 14-day free trial, I'd happily pay $20 for it. If free trials were available, like are common in the desktop software world, I think app prices could go waaay up.
  • fleitz 14y ago
    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.
• mc32 14y ago
  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.
  • napillo 14y ago
    I can tell the author is an Apple user - if I used an app for 15 seconds and didn't like it, I'd get a refund.
  • dredmorbius 14y ago
    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 14y ago
      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.
• AznHisoka 14y ago
  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 14y ago
    That sounds less like an argument against coffee analogies and more like an argument for making apps that are actually useful.
• deleted 14y ago
  [deleted]
• rhygar 14y ago
  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 14y ago
    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.
• siglesias 14y ago
  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-feel-about-buying-apps/ http://danariely.com/2011/12/25/the-oatmeal-this-is-how-i-fe...
  • mc32 14y ago
    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).
  • walterkim 14y ago
    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.
• amartya916 14y ago
  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?
• raldi 14y ago
  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?
  • hartez 14y ago
    Yeah, I still don't understand the logic behind this. I've used the App Store and the Windows Phone Marketplace, and of the two I've actually bought a lot more stuff from the Marketplace. The concept of "trial" software where you can later upgrade to the full version if you want is built right into the Marketplace and the phone OS, so it's fairly easy for developers to offer it if they want. When confronted with several apps that do essentially the same thing, I pick up the trial version of each one and then buy the full version of the one that works best. I've bought a lot of apps this way, almost all of them more than $0.99. If I decide to try a new version of a different app later, I can do so with pretty much no risk. Does anyone know why Apple doesn't offer this? Are they just worried it will somehow cause customer confusion?
  • phn 14y ago
    Don't you think it is the developer's responsibility to provide a demo/trial if they wish?
    • raldi 14y ago
      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.
• nickzoic 14y ago
  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 14y ago
    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 14y ago
      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.)
  • textminer 14y ago
    The failure of that model are the apps which provide only short-term functionality. e.g., I'll probably only need my offline map of Brussels or that puzzle game for a few days. But my being through with them within 96 hours doesn't mean I'm entitled for a refund-- in fact, they probably served their purpose! Such a refund model would rob developers of that niche.
• therandomguy 14y ago
  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.
• greggman 14y ago
  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 14y ago
    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.
    • swah 14y ago
      Totally agree, but 24 hours is time enough to finish a game...
      • deleted 14y ago
        [deleted]
    • SomeCallMeTim 14y ago
      > 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.
• brackin 14y ago
  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 http://i.imgur.com/FkNSU.png Then you can continue using the analogy and make sure users actually value your app.
• m3mnoch 14y ago
  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.
• tptacek 14y ago
  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 14y ago
    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.
    • tptacek 14y ago
      Nobody should be selling "craftsmanship" for a dollar until they have at least 50 employees.
• dredmorbius 14y ago
  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.
• daveman 14y ago
  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.
• Udo 14y ago
  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.
• rgraham 14y ago
  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.
• angrycoder 14y ago
  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 14y ago
    Thanks. You managed to say it all better than I did somewhere here. Let's just hope the message gets trough.
• robomartin 14y ago
  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.
• webwanderings 14y ago
  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.
• michaelhoffman 14y ago
  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.
• crazygringo 14y ago
  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...
  • zht 14y ago
    Or users can be allowed to refund their apps
    • recoiledsnake 14y ago
      Or better still, allow developers to specify a trial period if they wish to. Only Windows 8 and Windows Phone App stores currently do this, I believe. Some apps that might be of a single use kind won't make sense for this, but most apps like games will and there will be less resistance to upgrading rather than downloading the "Pro" version all over again.
  • alexanderh 14y ago
    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.
• phil 14y ago
  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.
• PaulHoule 14y ago
  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.
• chollida1 14y ago
  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.
• pbreit 14y ago
  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.
• jbrodkin 14y ago
  Great article. I would have spent 99 cents to read it.
• adetayo 14y ago
  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.
• tuananh 14y ago
  one more point: your coffee doesn't get free update. app does.
• sharingancoder 14y ago
  Agreed! Way too overused!
• dinkumthinkum 14y ago
  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.
• noconflict 14y ago
  Says the hipster from Portland?
• mh- 14y ago
  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.
• Too 14y ago
  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!"
• franzus 14y ago
  > 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.
• mmariani 14y ago
  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.
• redguava 14y ago
  Is Starbucks coffee in the US significantly different to Starbucks coffee in Australia? It's a serious question because I don't know anyone that likes Starbucks coffee here in Aus, we have great one-off coffee shops around that are doing very well.
• debacle 14y ago
  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.
• potkor 14y ago
  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.
• xyzzyb 14y ago
  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.
• tripzilch 14y ago
  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)
• bicknergseng 14y ago
  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.
• anywherenotes 14y ago
  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.