Time is Money
We have all heard the expression “Time is money”. A person should always have an estimate of what their time is worth because it helps them make work/life decisions. Here is great article by James Clear that delves into this concept in greater detail: https://jamesclear.com/value-of-time
At Resilia we got to thinking about this with the Holiday’s upon us and every minute of our time is needed for preparations. Should a customer buy one of our products online or should they go to a big box store? This is especially true when it comes to the lower priced items we offer as a large portion of the price is for home delivery. This is called “The Last Mile” in the eCommerce industry (https://en.wikipedia.org/wiki/Last_mile_(transportation). We did a rough estimate of the total cost to buy something from a store versus have it delivered to your home from a website using some of the concepts described in the James Clear article “Value of Time”:
The cost for an average person is almost $30. In many cases this exceeds the item’s price and in many cases the cost to have the item delivered to your home.
Here are steps we took to determine the cost of your time to go shopping at a store:
What is a minute of your time worth? For this exercise we use a conservative value of $.33 per minute. That is the average income that an individual earns in the United States, https://en.wikipedia.org/wiki/Personal_income_in_the_United_States. This amount may be less for someone retired or much higher for a successful lawyer that bills their time by the hour.
As a first step to our calculation a person needs to drive to a store and assumes that they do not bike, walk or take public transportation. Let’s also assume the average amount of time to get into your car, drive to the store, park and walk to the front door is 25 minutes. Therefore the first step of the process to buy a product at a store has a cost of $.33 per minute X 25 minutes which equals $8.25. Do not forget the return trip home so this number gets doubled for a total of $16.50 in commuting cost.
Add the cost of the vehicle. The IRS allows an individuals to deduct $.625 per mile driven as a business expense or for charity, https://www.irs.gov/newsroom/irs-increases-mileage-rate-for-remainder-of-2022. We will factor that the average shopper drives 2.5 miles to a store and a round trip of 5 miles. The vehicle cost of the trip to a store is therefore $3.12.
You are now in the store. During the holidays there are many sales associates on duty who are trained to ask how they can help you. Sometimes you like taking to sales associates to learn about the retailers latest offer. However even if a person simply replies “No Thank You” it adds more precious time to the trip and you may purchase something on impulse. Conservatively let’s say that a person in the store for 30 minutes assuming they know exactly where the item is located and checkout lines are not too long. This is another $9.90 cost for the person’s time.
The total of these costs is $29.52, almost $30.00! Perhaps you purchased other items that you intended to buy on this trip and your cost per item is much less. However, it is also true that with the pervasive supply chain disruptions there is a good chance that the item will not be in stock at the store. In this case you have to cost for the store trip in addition the online price or a second trip to a different store.
Think about how much your time is worth the next time you are shopping for something this holiday. Use our estimate or calculate your own from this simple method. You may discover that ordering online saves you money and gives you more time to spend the Holidays on more important things, like the people you love.