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Comment by ChuckMcM | Hacker News Reader

I found the comment fascinating "People will spend hours researching a $2 purchase, browsing reviews, emailing the developer, checking online forums. Then they will go to a coffee shop they’ve never been before and buy a $4 coffee."

It is so true, and so weird at the same time. Why the investment in research time for the app and the disdain for the coffee which will pass through your system roughly 45 minutes later? Makes me wonder if they should charge $19.99 for the app and offer a 'trial version' for $4.99 which lets you see if you want to buy it with no expiration date.

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I suspect it boils down to two things: the number of ways in which things can compete and the perceived level of normal consumption.

Starting with the latter: people who drink coffee mostly see it as near-daily consumption. If they're thinking about it at all, they're not thinking about "will I have coffee", but rather "which coffee to have". On the other hand, many software buyers have "don't buy anything" as a very real possibility in their minds. If I "have to buy it anyway", the difference between $2 and $4 per day doesn't seem important because people are surprisingly bad at multiplying by 365.

Coffee also presents a much less complex competitive landscape than software (which is not to say it is less competitive; I strongly suspect the reverse is true). As far as I can tell coffee shops can compete on price, location, ambience, brand, and flavor. My guess is that, above a fairly low bar for flavor, location is the dominant competitive attribute. "Am I going to walk an extra block to save $1?" Again, people don't know how to multiply by 365. I suspect coffee shops strategize thusly: "I'll get whatever customer base is closer to me than to competitors, and fighting on price is pointless. I might get some marginal purchases by improving branding and ambience, thus persuading people to stay longer and buy more." So everyone pays $4 at the nearest half-decent coffee shop and all is peaceful in the universe.

Software, on the other hand, is an incredibly complex offering and I think that complexity leads to a perception that diligent consumer research will be rewarded with enhanced satisfaction or reduced expenditure. The problem here is that the reduced expenditure is easy to quantify and guaranteed prior to purchase, whereas the enhanced satisfaction is poorly quantified and feels uncertain unless you're dealing with a market-leading strongly-branded product like Angry Birds. So, unless your'e buying Angry Birds, you'll spend some time looking to see what other apps are cheaper with "the same" features.

Hm. I feel like even after three rounds of editing I've achieved a very low insight-to-sentences ratio. Sorry :-)

I'm not sure many people really spend hours researching a $2 app purchase, but I think the reason you spend more time doing that than buying coffee is quite simple.

With Coffee you know what you are getting and know that at a minimum it will supply enough caffeine to give you a mid-morning perk. Almost all coffee shops provide coffee that is consistently good enough that it won't taste disgusting so the process is an evolutionary one, if you find a better coffee shop that is only slightly further away you will just go there from that point on.

The problem with buying apps, especially on mobile stores is that I've bought several (even well rated ones) that either do not work at all on my device or are close to useless for my purposes. Since many apps don't offer trials and the android store return policy doesn't give you enough time often to make an informed decision of whether or not to keep an app you do have to do your homework or you risk throwing $2 away.

$2 isn't allot of money but it is for something which is 0 use to me, a $4 coffee even if it's not the most delicious will at minimum provide a caffeine fix. I can think of a few occasions on the android market where I have spent $10-15 just buying a variety of $2-5 apps that supposedly do the same job in order to find one that I actually want to use. I can reduce this cost significantly by doing some research although an hour would seem excessive in most occasions 15-20 minutes may be reasonable.

Right, coffee is a (mostly fungible) commodity product that requires an investment of ~3-5 minutes of drinking time and you're done.

There's basically no opportunity cost to picking the "wrong" coffee. It won't take you longer to drink, will probably give you the same amount of caffeine and just won't taste quite as good as the "right" one.

Apps can require a significant time investment to learn/use them. There's also a potentially large opportunity cost to picking the wrong app. App store searching kind of blows, without some invested time, you can't even know which one is the "right" app for you to spend some time on. Though I also agree that 15-20 minutes is much more likely than hours of research.

The $2 isn't the point, it's the cost after the purchase that you're spending time to make sure it isn't wasted.

I agree with the fact that it's not really about the $2 or even how many competitors there are -- it just happens to be that the apps are currently priced about the same as a coffee.

My hypothesis is that the bigger question is really one of expectation -- whether the app accomplishes exactly what the user expects it to do (not what the app markets itself to do). The more complex the expected result (ie. coffee -> coffee hit, fart app -> laughs, conversion calculator -> converts stuff, your nifty social app -> ?) the more doubt people have in just throwing down money (regardless of how "small" the amount).

Because a cup of coffee has a known consistency.

A paid app might or might not deliver the functionality, and if it doesn't, after one $1.99 app purchase you need to buy another app, and the first one is a realized loss. Psychologically we don't react well to realized losses.

I wonder if, psychologically, it's because the game is perceived as something you will permanently own, while the coffee is temporary. People seem to weigh the first kind of decision much more heavily.

I'll throw out a random personal theory here. I think this is because buying apps is a solitary activity.

As humans we are more comfortable fitting in or following. When you go to a coffee shop or a crowded store, you're buying something because you actually see others buying it. The decision-making aspect is "taken away" from you, as it was already done by people at large. There is also the element of human interaction with the barista. It's much easier to spend $4 this way.

Yes, at the coffee shop you also might have an immediate purpose -- like chat with a friend. But even when I am alone, spending $4 doesn't seem like a big investment. It feels and seems normal. And note that this doesn't have to do with the quality of the product.

In the meantime, when you're at alone and are browsing an app store, the burden of decision making is on you. In essence, the thought process is "am I making a good decision? is it normal to buy something like this? do I really need this?" With that, $1 can seem like quite a bit when you have time and solitude to decide.

So app stores should make a big, big thing of showing other users who are currently buying, last bought n hours ago etc.?

I see more hospitality industry sites are doing this in the last years, e.g. booking.com.

I think there is a lot more to this, and I think you're onto something.

Buying coffee is not only a social activity, it's something that's seen as a sociable thing to do.

Buying apps is indeed a solitary activity, and - despite the burgenoing marketplace - is still something slightly outside of the mainstream.

I suspect there is trust issues here - the average app isn't well trusted as opposed to the average cup of coffee - as well as exchanging money for a virtual thing as opposed to a physical.

edit : thinking further about this - the top n listings are just like the coffee queue. It's self reinforcing because you see other people are buying the app, which overcomes some of the trust issues. We all think - well, all these other people bought it, must be something OK about it.

The problem this brings about is the self-reinforcing top of the market which becomes harder for others to break into.

I would go even further to say that all consumer purchases are made to enable social interaction, even when transacted in solitude.

The apps that have been successful on a grand scale are typically ones you want to immediately show off to your friends. You are not buying entertainment or utility, you are buying a conversation starter. That is where the value lies.

I'd take it a step further. People don't weigh the coffee-purchasing decision at all. That's the key difference. Coffee buying has become a routine, whereas app buying is consciously considered. The process of considering and purchasing an app is -- at least for most people -- not a daily, habitual, automatic one. And so it is with most purchases in life. Anything we're not doing on a super-regular basis does not become automated and relegated to subconscious action to the extent that a daily routine does.

That's not to say that buying an app can't become a daily routine, of course. Anything is possible. But it seems unlikely for most people.

If right next to the $4.00 coffee there was a large selection of free but low quality caffeinated beverages, I'm pretty sure some folks would spend a lot more time before deciding to buy. And the chemical addiction thing probably short circuits some faculties of reason.

I find I do this all the time. For instance, if I'm out of town for the day, I'd think nothing of spending $10 at Wendy's for lunch. But somehow spending $8 for an MP3 album I've wanted badly for months is an extravagance.

For me, part of the problem is family budgeting. As long as I only do it a few times a month, I won't have to justify $10 for lunch to my wife. Even though going with a $2 lunch and buying the $8 album would be spending the same amount of money, in practice I'd still be trying to justify the album purchase.

Clearly that sucks. But there's a pretty good reason for it. If we weren't budgeting, my wife and I would probably buy 20-30 albums a month, and that we cannot afford. So clamping limits on albums makes very good sense. But it definitely feels like it leads to non-optimal use of money overall -- we're keeping to a budget, but perhaps not spending the money as well as we could.

More to do with marketing? I've told my boys all their lives "If they have to put it on a TV ad, its probably crap. Good stuff we all know about through our friends."

Got to ask - you don't budget Wendy's? (Hardees is a better choice anyway:)

I believe my wife budgets both restaurants and fast food. I suppose that means at a fundamental level, the problem is shifting budgeting from one line item to another is a PITA.

I don't think it's anything to do with marketing. I just grabbed Wendy's as an example, but I also recently ended up at a relatively fancy restaurant I'd never heard of before walking in their front door, and I spent more on a single glass of wine there than that album would have cost. On some level, I think it comes down to feeling like food is a necessity and buying more music is not. But at the same time, if you'd offered me the choice ("Don't buy the wine and you can buy the album") I'd have taken the album for sure.

That is so true! If I consciously do the A/B comparison, I'd make entirely different choices. But I'm faced with one choice at a time. So the dilemma never materializes.

I actually use this to the opposite effect to convince myself whether an app is worth the cost. I think of it as "for the price of half a latte, I get to own and enjoy an app for the next N years". Seems like a great deal to me. If all I have to do is buy some developer the equivalent of half a latte for a productivity app I'll enjoy daily, I think I'm actually getting a steal.

BTW - I did buy Shift Jelly's PocketCasts app from the Android Market for something like $2.99. I highly recommend it, the app has un-tethered me from iTunes podcast syncing. Now I just download/stream exactly the episodes I want to listen to.

The app has some rough UX edges regarding behaviors of the back button, etc, but I'm going to write the developers about that.

But people do this all the time in other parts of their life as well.

They'll drive all over town just to save $20 off their grocery bill by using coupons.

But many won't spend 15 minutes haggling over the purchase of a car where you could gain thousands just by doing some research and getting the best deal for yourself. They'd rather just get the unpleasantess over with as quickly as possible.

The key, of course, is to enter markets where people value their time more than their money. As soon as you start dealing with customers who value their money more than their time, you've hit the treacherous shoals of business.

Why the investment in research time for the app and the disdain for the coffee which will pass through your system roughly 45 minutes later?

It makes some amount of sense. If I were to impulse-buy every app I saw under $5 that looked like it might be fun or useful, I'd be spending many thousands of dollars a year.

Yes, but if you buy one coffee a day at $4 that is $1,460/yr so buying one app a day is half that (well for $2 apps) or only $750/yr.

Before World of Warcraft came out, I budgeted $50/month on computer games. In the sense the budget was 'committed' in that I had already taken into account spending it, and treated it like an entertainment expense. So spending up to my budget in any given month (with up to one month carry over) I found one could 'impulse' buy without a lot of guilt while not losing control of ones budget. Worked pretty well.

Of course now I don't have a system to play those Win98 games :-(

First, because you have a certain baseline expectation for $4 coffee. If the coffee tastes like asteroid (http://www.topatoco.com/merchant.mvc?Screen=PROD&Product...), you'll probably complain, and at a minimum you'll never shop there again.

You also have a shop full of other patrons purchasing and appearing to enjoy the coffee.

Shopping online, you normally have neither of those cues. Reviews help somewhat with the latter. Strong refund policies (including the case of "didn't do what I needed it to do") would help with the former.

Apart from that, I don't see it as particularly rational to research a $2 purchase extensively, but on the other hand, when you care about specific functionality, it might make sense to do a bit of research rather than buy every plausible-looking app on the market and see if it has the feature you want.

For me it's not the app's cost so much as the decision to invest time into it (set it up, form new habits, etc.) A cup of coffee requires no time investment -- the equivalent of the app for me would be researching whether I should drink coffee at all or what brand of coffee I should regularly buy.

I wish all reviews on the app store showed how long the reviewer used the app and how many times for this reason.

I can spend hours (well, looong minutes) staring at the coffee aisle in the supermarket but if I'm in Starbucks I have little choice but to take it or leave it.

Maybe the fact that there is so much choice available, be it apps or websites, that it makes it much more tempting to shop around - or just being baffled by choice. You can't make a bad decision if there's no alternative.

choice paralysis. One of my favorite TED talks. Barry Schwartz covers this http://www.ted.com/talks/barry_schwartz_on_the_paradox_of_ch...

That's indeed something worth researching in. First, people are not familiar with credit card micropayments. I wonder what if you had a "snack-machine" for apps that worked with coins, would people buy more apps?

Secondly, a bad app is not the equivalent of just bad tasting coffee, it's coffee that tastes like lemon and makes you puke. It's hard to make coffee that doesnt taste like coffee, while it's easy to make an app that promises one thing and delivers a completely different one.

Third, an app can be malicious, will stay in your system for ever, and the endorphic rewards from it are usually long-term and come in bits. Caffeine reaches your brain within minutes.

It's not weird if you understand what's really happening when people are buying stuff.

Value comes from the amount paid vs the perceived value gained from getting the object. Something along that line. I learned it in a marketing class.

Just because you can afford a $100 watermelon doesn't mean you have to. Same thing as a $4 coffee or a $2 app.

The concept of perceived value is very important, more so for luxury goods and services.

Who spends hours researching a $2 app? I've never heard of this.

The only way I might do that is if the app also requires a large time investment. Or if I'm trying to find a new game to play from among thousands. In either case, I'm clearly getting a lot more than $2 of value from the research.

Frequently though, I will just buy a game after hearing about it somewhere and then spending a few minutes looking at the screenshots reviews.

An old friend and business owner spends hours/days researching the best wireless plan for his employees, saving maybe $100. While his books go undone, training never happens, the store is a mess.

So maybe not $2. But consider the most valuable asset anyone has: their time. So easy to squander, an hour is much more valuable than $100.

I find I often spend a LOT of time researching products that are a) purchased as gifts or b) physical items.

I really hate when I buy a cheap item that breaks either as a gift or that's hard to get rid of... cash outlay isn't the only cost in purchases.

Isn't one, in consumer terms, a fungible commodity? ie. a latte in one coffee shop is almost identical to another - especially if it's the same franchise?

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