Watching the Pennies

It has proved useful for one thing already though – reminding me of our slightly skewed psychology of money..

Having bought this device to sit on my wrist, I thought I should make the most of it, so followed Apple’s commands religiously and headed to the App store. Scrolling through the best apps available (as dictated by the giant fruit in the sky), my thought process went something like this:

• Free – yep, I’ll have that one
• Free – yep, looks worth a try
• £2.99 – No way
• £3.99 – Absolutely no way
• £1.99 – Hmmm… (long pause) … maybe one for later
• £7.99 This is ludicrous! (Shouting to my wife) ‘Seven ninety-nine! For an app!’

It was broadly at this point, seeing the exasperated reaction of my other half, that I realised how ridiculous this was. I’ve happily spent a decent chunk of money on watch that really, I don’t need. But the thought of spending just a couple pounds on something that would actually make the watch useable and useful was wholly unappetising.

This reminded me of three things I read a while ago on our relationship with money, via the brain of Dan Ariely.

Mental accounting

We separate money into different mental ‘pots’, and rarely compare those to each other to help us make more better decisions. So, we’ll compare the price of a pint of milk to half a pint of milk. We might compare a pint of milk to a bottle of water. But we’re unlikely to compare it to the price of a banana, and definitely not to a stapler. More than that,  if we can save £5 on a £10 pen by walking to a different shop down the road, we will. But if we can save £5 on a £1000 camera by doing the same thing, we won’t even entertain the idea.

Clearly, in my brain, I have one pot for ‘shiny, unnecessary, overpriced Apple products’ and another seperate one for ‘well made, grossly undervalued, intuitive software’.

The cost of free

We have an odd relationship with ‘Free’ too. If you had the choice of two sweets, one for 50p and one for 75p, you’d weigh up the quality benefits and make a choice. But if one was free, and one was 25p? And don’t get me start on ‘free’ delivery…

This is where Apps have a problem. As soon as the decision to offer apps for free was made, the whole landscape changed, with a new anchor being set. Now things are either free, or not, meaning that £2.99 suddenly seems like a fortune in comparison to most of what you have on your phone.

Pain of paying

If you’ve always wondered what the best way to split the bill at a restaurant is, the answer is for each person to take it in turns to pay for the whole thing. It means everyone makes less ‘payments’, reducing the pain of paying, and for everyone not paying, a lovely feeling of getting something for free. And to keep it even, you need to go out regularly for lots of lovely food…

Buying the watch was one payment, one shot of ‘pain’. Buying several apps, even at a lower value, repeats the painful paying over and over again (even though the actual making of the payment is quite painless). Now, if they’d had an ‘Apple Watch’ bundle ready to download for £9.99, I might have been tempted…

I’m hoping that I find a reason to keep the watch. But if not, at least I’ll have been reminded to think a bit more slowly before buying something. Especially if it’s essentially just a glorified step-counter…

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