Businesses Need to Attach Value to Time

While many professions and trades know and clearly state their billable hours, there are other chunks of time on which businesses and consumers increasingly have to make independent judgments.

Consultants, accountants, attorneys and other professions have hourly rates, often assigned to specific categories of members of the firm. For example, the time of senior associates is valued (and billed) more highly than junior staff.

Consumers of such services have clear choices. When someone brings in a car for service, the hourly rate of labor is posted. One can easily find the hourly rates of plumbers or electricians.

However, there are many other times that businesses and individuals have to make calculated decisions about the value of time versus the cost of that time on a case-by-case basis. Smart businesses have been figuring out other ways to value customers’ time and put a price on that time.

For example, booking some Delta Air Lines flights two weeks in advance costs about half the price. For those travelers who take the time to plan ahead, there is great savings. However, those who either by choice or necessity decide to book closer to the trip dates must pay for that decision.

Travelers face choices on overbooked airlines, which offer vouchers valued at hundreds of dollars as long as they take a different flight several hours later. The airline and the individual effectively agree on the value of those hours, based on the value of the voucher. Depending on the traveler’s situation, that value can vary widely.

With interest rates rising, some banks charge home buyers varying fees to lock each available interest rate 30 or 60 days in advance. While there might be no fee to lock a rate of slightly over 6 percent, a $3,000 fee might be charged to lock a rate at slightly over 5 percent. The buyer essentially is paying for the time between the present and the closing of the property.

After paying roughly $75 for entrance into Universal’s theme park in Orlando, visitors can pay an equivalent amount for an Express pass to bypass the long lines of most of the attractions. It’s similar to nearby Disney World’s options; those who choose not to pay the extra fee can insert their admission ticket at one attraction and receive a designated time to return. However, during the time – often several hours later – only one pre-planned booking is allowed. The time saved by Universal Express pass buyers is perceived by them to be worth at least another price of admission!

With time becoming more precious, more opportunities will arise to calculate a value to time. Businesses and individuals are going to have to think about relating the monetary value of time and ultimately the best ways to spend it wisely.