How Much is Your Time Worth?

April 20, 2021 by Ben Carlson

In his final letter to shareholders as CEO, Jeff Bezos took a victory lap by calculating all of the time Amazon Prime has saved for its customers:

Customers complete 28% of purchases on Amazon in three minutes or less, and half of all purchases are finished in less than 15 minutes. Compare that to the typical shopping trip to a physical store – driving, parking, searching store aisles, waiting in the checkout line, finding your car, and driving home. Research suggests the typical physical store trip takes about an hour. If you assume that a typical Amazon purchase takes 15 minutes and that it saves you a couple of trips to a physical store a week, that’s more than 75 hours a year saved. That’s important. We’re all busy in the early 21st century.

So that we can get a dollar figure, let’s value the time savings at $10 per hour, which is conservative. Seventy-five hours multiplied by $10 an hour and subtracting the cost of Prime gives you value creation for each Prime member of about $630. We have 200 million Prime members, for a total in 2020 of $126 billion of value creation.

You may quibble with his estimates on how much your time is worth on an hourly basis but the amount of time saved for consumers is probably low for many households.

In 2020, my family placed more than 600 orders through Amazon. This number was higher than normal because of the pandemic but I doubt it goes down considerably in the years ahead.

My wife and I have three young children. It’s not exactly a walk in the park to take them all to the mall for new clothes or a sporting goods store to get soccer cleats. Now we can simply buy this stuff on Amazon and it shows up at our front door the very next day.

No rounding up the kids to get in the car. No trips to the store. No searching for parking spots. No aimlessly wandering around the store looking for just the right size or style.

All of that is avoided by ordering directly on your phone or computer with the click of a button.

Some people claim Amazon’s prices aren’t the best and that’s probably true. I’m sure you could find lower prices elsewhere.

But that’s not the point.

You’re not necessarily going to Amazon for the best prices. You’re going to Amazon for convenience. Prime as a convenience is worth every penny and then some.  And convenience is something I’ve grown to appreciate more in life as I’ve gotten older and accumulated more responsibilities.

To continue reading, please go to the original article here:

https://awealthofcommonsense.com/2021/04/how-much-is-your-time-worth/