Stop Using The Cup of Coffee vs. $0.99 Cent App Analogy
Horrifying.<p>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.<p>The point of the coffee cup comparison is <i>marginal utility</i>: 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.<p>Oh, you really like Starbucks coffee? That's unfortunate, because it's pretty bad, but more importantly: you <i>militantly miss the point of the comparison</i> when you benchmark the experience of installing a new app against the enjoyment you get from a cup of coffee.<p>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.<p>A dollar at the margin for a person with a $600 phone on a $50/mo data contract is <i>not an enormous gamble</i>. 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 <i>anything</i> 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.