Why We Pay for Convenience

I was en-route to work the other day when I noticed a brochure from the New Jersey Transit Association had been left on one of the nearby seats. Apparently, I could have my monthly transit pass mailed to my house directly. This sounded great since you have to wait until the first of the month to buy them at the station, which means you get to wait in line for 20 minutes and, consequently, end up late for work.

Of course, this convenience had a price: $3 to be exact, in the form of a processing fee, which I suppose involves an envelope and stamp. Needless to say, despite one persistent memory that involved all of the electronic ticket terminals shutting down on June 1, I decided to pass. I’ll just have to wait in line.

While I could plead the frugal fifth in this instance, I have, however, paid my fair share of convenience charges. In fact, we all have: fees to use ATMs, charges for printing tickets on the Web, $5 extra to cut the line at a buffet. The list, it seems, goes on and on. However, as University of Kansas marketing professor Dennis Rosen points out, convenience fees are hardly new.

“Consumers have always paid for convenience,” Rosen, who also runs consulting website WinfluenceSolutions.com, says, citing a person’s inclination to hire someone to trim their lawn or pick up packaged, pre-made foods at a grocery store. “The question now is ‘why are people continuing to pay these fees while the economy is bad?’”

The answer, while complicated, ultimately comes down to this: Consumers aren’t only pressed for cash, they’re also pressed for time. As such, there’s an inherent value associated with anything that saves a few minutes. Adrian Ott, author of The 24-Hour Customer, calls this correlation a time-value trade-off. She points out that some existing companies have built very profitable businesses around this concept. Take FedEx, for example, who essentially sells overnight delivery.