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On the reason why people will spend $5 on a coffee but not $1 on an app: I've been thinking about this for a while and noticed this behaviour amongst my friend

On the reason why people will spend $5 on a coffee but not $1 on an app: I've been thinking about this for a while and noticed this behaviour amongst my friends. I have one friend who is a true apple fan-boy and finishes his phone contract early so he can get the latest iPhone earlier at much cost etc. I recently finished an app and said - hey, do you mind downloading it for me and checking it out? He says, "but it costs £1?!" I said, "ok, no worries, I'll GIVE you the £1 right now" He still said "No". Why? Because "he never spends money on apps." Weird, right? Then last night I'm watching Horizon - "How we make decisions" [1], and they talked about how when we feel we are ahead we are much more cautious than when we feel we are behind, when we experience "loss aversion" and are more likely to take a gamble. I wonder if this is the best way to monetize apps. So you offer the app for free (no risk at all), then instead of offering "add-ons", you offer to remove "restrictions", implying that the user is already behind and they should take the gamble to get back to their "free" app. [1] http://www.telegraph.co.uk/culture/tvandradio/tv-and-radio-reviews/10658646/Horizon-How-You-Really-Make-Decisions-review.html http://www.telegraph.co.uk/culture/tvandradio/tv-and-radio-r...

megablast 13y ago
You can't just by one app, unless you link the iPhone to your credit card, which a lot of people do not want to do.
- philbarr 13y ago
  He had already done that, because he needed to buy a couple of very expensive music apps he "needs". I would agree if that was the case though. Should have said. But usually he doesn't like to buy any apps on general principle. I wanted to explore the feeling of aversion he has to paying £1 on his device, which is so strong he won't do it even if someone pays him £1 to do it. I've felt that aversion myself, and as an indie app dev I'm naturally quite keen on finding ways to explain it or work around it. Some of the bigger companies seem to get around this by just targetting kids who don't experience the aversion 'cos it's not their cash - but I don't want to do that.
  - Nursie 13y ago
    >> He had already done that, because he needed to buy a couple of very expensive music apps he "needs". Maybe he just doesn't want to get into the habit of casually buying apps. I see them as a category of impulse purchase that I largely want to avoid, because I have enough categories of impulse purchase in my life already. I get more than enough use out of my smartphone as a comms device, as a web browser and as a kindle terminal.
robmcm 13y ago
Even better introduce restrictions after a set time limit that the user needs to pay to regain. (Just don't tell EA)
- philbarr 13y ago
  Hmm - interesting. Two samples spring to mind: One of my apps is called "Calculate" [1] which has you solving maths problems. There is always a solution which you can view. You start off with ten solutions and when you run out you can IAP more. I recently played a game called "Pocket Rally". Download was free, but after the first few levels you had to pay to upgrade to the full version, which I did. "Calculate" has zero purchases so far (although it was only released a month or so ago and only has about 50 users). With "Pocket Rally" I didn't seem to mind paying the £1 to upgrade. I think the key difference between the two is that with Pocket Rally I didn't know I was behind, so when I found out I was I upgraded. With Calculate I let people know from the off how many solutions they have left - they are well aware of the situation and not really experiencing loss. So the key is to introduce restrictions after some time limit and not warn them beforehand. That way they truly experience loss-aversion. Not sure if this is evil or just marketing. EDIT: changed lots of spelling and grammatical errors [1] https://play.google.com/store/apps/details?id=com.simplyapped.calculate https://play.google.com/store/apps/details?id=com.simplyappe... (and before anyone complains about the self promotion, this is also something you are supposed to do, right?)
  - robmcm 13y ago
    Yeah give them all the solutions and then take them away after a day or so. If they had some complete percentage you could also reduce that once they are removed, that's an achievement loss right there.
    - philbarr 13y ago
      Now I'm starting to laugh at all the evil ways I could treat my users!
  - slig 13y ago
deleted 13y ago
[deleted]
ThomPete 13y ago
Isn't it simple really. With coffee (and food in general) I know what I going to get it's a craving I have right now, it's chemistry. With an app I don't know what I am getting and I don't have that same need so my intellect needs to be persuaded which is a much harder thing to accomplish. It's psychology.
- RogerL 13y ago
  That's a good point, but not the whole story(at least for me). I love my Kindle. I am very adverse to buying books on it, even though I would sometimes go hungry to buy physical books. It makes no sense, I know and acknowledge that it makes no sense, yet it is still part of my decision making process, and post-event evaluation process. Meaning - those books on my bookshelf that I may never read - no regret, they may come in handy. That ebook I bought and actually used - I still have nagging "did I blow $9.99 on that - I could have gotten by with googling and reading the docs".
  - ThomPete 13y ago
    And yet you still buy a coffee for 5USD no questions asked. Thats kind of the point :)
  - aestra 13y ago
    Well there are reasons I am adverse to buying ebooks. DRM - if I am going to buy it I want to actually feel like I own it. portability - will I be able to read my books in the future? sharing - when I get a good book I let all my friend borrow it and read it. I borrow friends books a LOT, in fact thats probably the main way I read books is just borrowing my friends' books or borrowing them from the library. selling - when I am sick of looking at a book on the bookshelf that I probably won't pick up again I either sell it or donate it to the library. So many books have passed through my hands and very very few have stayed there.
jasey 13y ago
I'm currently surveying 600 of my early users of my android app. What's disconcerting so far is their answer to the following question: The app will be 100% free for you forever (thank you for the support) however what do you think is reasonable pricing? Consider, that some of the revenue will be re-invested in making the app better for all users It's early days now but it's trending towards $1/$2 when in reality I believe that it's worth allot more to anyone who gets a fair amount of value from it.
- sosborn 13y ago
  Once you get something for free it becomes hard to associate a monetary value to it.
- Perceval 13y ago
  Price and value are not the same thing. Lots of labor can make something valued, usefulness can make something valued, but as early liberal and Marxist political economists found out the hard way, it's nearly impossible to derive a theory prices from a theory of value. The price is going to be determined by supply and demand, not by your labor or the usefulness of the app. There are occasions when you can successfully price a good above supply and demand (when you have a monopoly on a good that isn't easily substitutable), but I doubt you're in that scenario.

megablast 13y ago

You can't just by one app, unless you link the iPhone to your credit card, which a lot of people do not want to do.

philbarr 13y ago
He had already done that, because he needed to buy a couple of very expensive music apps he "needs". I would agree if that was the case though. Should have said. But usually he doesn't like to buy any apps on general principle. I wanted to explore the feeling of aversion he has to paying £1 on his device, which is so strong he won't do it even if someone pays him £1 to do it. I've felt that aversion myself, and as an indie app dev I'm naturally quite keen on finding ways to explain it or work around it. Some of the bigger companies seem to get around this by just targetting kids who don't experience the aversion 'cos it's not their cash - but I don't want to do that.
- Nursie 13y ago
  >> He had already done that, because he needed to buy a couple of very expensive music apps he "needs". Maybe he just doesn't want to get into the habit of casually buying apps. I see them as a category of impulse purchase that I largely want to avoid, because I have enough categories of impulse purchase in my life already. I get more than enough use out of my smartphone as a comms device, as a web browser and as a kindle terminal.

robmcm 13y ago

Even better introduce restrictions after a set time limit that the user needs to pay to regain. (Just don't tell EA)

philbarr 13y ago
Hmm - interesting. Two samples spring to mind: One of my apps is called "Calculate" [1] which has you solving maths problems. There is always a solution which you can view. You start off with ten solutions and when you run out you can IAP more. I recently played a game called "Pocket Rally". Download was free, but after the first few levels you had to pay to upgrade to the full version, which I did. "Calculate" has zero purchases so far (although it was only released a month or so ago and only has about 50 users). With "Pocket Rally" I didn't seem to mind paying the £1 to upgrade. I think the key difference between the two is that with Pocket Rally I didn't know I was behind, so when I found out I was I upgraded. With Calculate I let people know from the off how many solutions they have left - they are well aware of the situation and not really experiencing loss. So the key is to introduce restrictions after some time limit and not warn them beforehand. That way they truly experience loss-aversion. Not sure if this is evil or just marketing. EDIT: changed lots of spelling and grammatical errors [1] https://play.google.com/store/apps/details?id=com.simplyapped.calculate https://play.google.com/store/apps/details?id=com.simplyappe... (and before anyone complains about the self promotion, this is also something you are supposed to do, right?)
- robmcm 13y ago
  Yeah give them all the solutions and then take them away after a day or so. If they had some complete percentage you could also reduce that once they are removed, that's an achievement loss right there.
  - philbarr 13y ago
    Now I'm starting to laugh at all the evil ways I could treat my users!
- slig 13y ago

deleted 13y ago

[deleted]

ThomPete 13y ago

Isn't it simple really. With coffee (and food in general) I know what I going to get it's a craving I have right now, it's chemistry. With an app I don't know what I am getting and I don't have that same need so my intellect needs to be persuaded which is a much harder thing to accomplish. It's psychology.

RogerL 13y ago
That's a good point, but not the whole story(at least for me). I love my Kindle. I am very adverse to buying books on it, even though I would sometimes go hungry to buy physical books. It makes no sense, I know and acknowledge that it makes no sense, yet it is still part of my decision making process, and post-event evaluation process. Meaning - those books on my bookshelf that I may never read - no regret, they may come in handy. That ebook I bought and actually used - I still have nagging "did I blow $9.99 on that - I could have gotten by with googling and reading the docs".
- ThomPete 13y ago
  And yet you still buy a coffee for 5USD no questions asked. Thats kind of the point :)
- aestra 13y ago
  Well there are reasons I am adverse to buying ebooks. DRM - if I am going to buy it I want to actually feel like I own it. portability - will I be able to read my books in the future? sharing - when I get a good book I let all my friend borrow it and read it. I borrow friends books a LOT, in fact thats probably the main way I read books is just borrowing my friends' books or borrowing them from the library. selling - when I am sick of looking at a book on the bookshelf that I probably won't pick up again I either sell it or donate it to the library. So many books have passed through my hands and very very few have stayed there.

jasey 13y ago

I'm currently surveying 600 of my early users of my android app. What's disconcerting so far is their answer to the following question: The app will be 100% free for you forever (thank you for the support) however what do you think is reasonable pricing? Consider, that some of the revenue will be re-invested in making the app better for all users It's early days now but it's trending towards $1/$2 when in reality I believe that it's worth allot more to anyone who gets a fair amount of value from it.

sosborn 13y ago
Once you get something for free it becomes hard to associate a monetary value to it.
Perceval 13y ago
Price and value are not the same thing. Lots of labor can make something valued, usefulness can make something valued, but as early liberal and Marxist political economists found out the hard way, it's nearly impossible to derive a theory prices from a theory of value. The price is going to be determined by supply and demand, not by your labor or the usefulness of the app. There are occasions when you can successfully price a good above supply and demand (when you have a monopoly on a good that isn't easily substitutable), but I doubt you're in that scenario.