On the other hand, if people all made such rational comparisons about marginal utility, not many people would be paying $100/month for TV channels that only allow them to watch certain shows at certain times and are full of interruption based advertising and not many people would be flushing $15 down the drain to go see a 90 minute movie instead of buying a month's membership to World of Warcraft and getting tens or even 100+ hours of enjoyment out of it.
The thing is that some people want what they want and they don't care about the long term investment angle. So they're willing spend $8 on a beer at a bar instead of having something healthier and cheaper like water. A lot of those same people won't spend $8 in a year on apps, no matter how rational a case the author might make. In general, food, alcohol, caffeine and cigarettes are more effective than software for generating these kinds of poorly-planned impulse buys (though a lot of Chinese gaming companies have been doing well with free-to-play games and micro-purchases for the past 6 years or so).
In retrospect, I think I've only bought three apps in my nearly 4 years of having an iPod touch, one of which cost 99 dollars. It's a heck of an app, though, and has been in development for longer than the iTunes store has existed.
I very much think that's the wrong lesson to learn from people's willingness to fork over $100/mo for pay TV.
It is not an iron law that people will not pay $8 for apps because less than $8 is what apps cost, and $8 is what beer costs, and $100 is what pay TV costs.
It is a law, I believe called "gravity", that products that present themselves as market substitutes for other products that cost $1 will have a hard time selling for $8. This does mean that, absent a very effective and inventive marketing strategy, casual games and offline web page readers are hard to sell for $8.
Then the logic question as far as the OP's original topic is this:
Can any app truly be a substitute good for a sweetened beverage with stimulants in it? I would say no. It doesn't matter how much people are willing to spend at Starbucks. It has virtually no bearing on how they'll value your app.
I think "online purchases" (software services, mobile apps, etc.) are in special category because they are generally run and sold by people which really don't know a lot about pricing and selling.
>and not many people would be flushing $15 down the drain to go see a 90 minute movie instead of buying a month's membership to World of Warcraft and getting tens or even 100+ hours of enjoyment out of it.
So, playing some shitty game for 100+ hours instead of watching a movie would be the result of "rational comparison" of time spending? Who would have thought...
The thing is that some people want what they want and they don't care about the long term investment angle. So they're willing spend $8 on a beer at a bar instead of having something healthier and cheaper like water. A lot of those same people won't spend $8 in a year on apps, no matter how rational a case the author might make. In general, food, alcohol, caffeine and cigarettes are more effective than software for generating these kinds of poorly-planned impulse buys (though a lot of Chinese gaming companies have been doing well with free-to-play games and micro-purchases for the past 6 years or so).
In retrospect, I think I've only bought three apps in my nearly 4 years of having an iPod touch, one of which cost 99 dollars. It's a heck of an app, though, and has been in development for longer than the iTunes store has existed.