The Economics of Time
Paying for Speed
How businesses charge extra for speed - express delivery, tatkal tickets and fast-track services - and why this is a form of price discrimination by time value.
Many businesses charge a premium for speed.
Examples
- Express delivery from e-commerce and courier firms.
- Tatkal railway tickets at higher prices.
- Fast-track passport and visa services.
- Priority boarding at airports.
- Express checkout lanes.
- Quick commerce delivering in minutes.
Why it works
People with higher value of time or urgent needs are willing to pay more. Businesses use this to segment customers.
Price discrimination
Charging different prices based on willingness to pay is called price discrimination. Speed premiums are a common form: the product is similar, but the time cost differs.
Is it fair?
- Efficient: those who value speed most get it.
- Concerns: when public services offer paid fast tracks, the free option may be deliberately slowed, hurting those who can’t pay.
Cost of speed
Speed often costs more to deliver: dedicated staff, air transport or dark stores near customers.
A traveller needs to reach home urgently for a family event. She pays extra for a tatkal ticket booked a day before, while others who planned ahead paid the normal fare.
They reflect different values of time and extra delivery costs.
- Businesses charge premiums for express services.
- People with higher time value pay more.
- Speed premiums are a form of price discrimination.
- Paid fast tracks in public services raise fairness concerns.
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