Summary book 'free' - The penny gap

he 'penny gap' refers to the phenomenon that buyers do not even want to spend the lowest price (1 cent). Reasons are that we are starting to think about choice with any price. [Szabo] called this "mental transaction costs": we do not want to think about anything unless we really have to. He claimed that the system of micropayments was doomed to failure because they limit economical cost but not the cognitive costs.Josh Kopelman (First Round Capital) discovered that traditional price theory became irrelevant. There is only 'free' and 'all the other models'. Free turns around the demand curve. The biggest gap in any venture is between a product or service 'for free' and any price.