The World Experience Organization posted a fantastic interview with author Joseph Pine discussing a concept called “the Money Value of Time” in experiential design.
Do you think of time as a cost? Or do you picture time as revenue? In services, time is a cost. But when it comes to experiences, time is revenue. This difference comes down to one crucial concept: the Money Value of Time (or MVT).
Pine (who famously co-authored The Experience Economy way back in 1998) makes the argument for an astoundingly simple benchmark: How much are people paying per minute for the time to enjoy experiences (considering all the revenue streams generated like explicit payment for entry tickets or secondary revenue like food or merchandise)?
For example, when you spend $5 to buy a coffee to sit in a Starbucks for an hour, that’s roughly $0.08 per minute. $12 for a ticket to 2-hour movie? That’s approximately $0.10 per minute. Go to Disneyland for day? Around $0.17 per minute. Immersive art experiences and escape rooms are getting around $0.40-0.50 per minute. Premium tickets to Hamilton on Broadway? A whopping $5.00 per minute.
This is such a critical metric for design teams working on experiential projects like hospitality or retail. What do we need to invest in our projects to increase our MVT metric per guest? Will this fancy digital lighting and media experience drive a higher MVT? Or not? Designers should have at least a rough idea of an ROI hypothesis when they propose key elements of a place-making design.
You are what you charge for. If you charge for undifferentiated stuff, you’re in the commodities business. If you charge for tangible things, you’re in the goods business. If you charge for the activities you perform, you’re in the services business. You’re in the experience business economically and explicitly, if, and only if, you charge for the time that they spend with you. So time is the currency of experiences once again.”
Pine goes on:
There are hundreds of companies that are now charging admission, including places you would never expect it: retail stores, restaurants, tourism areas, manufacturers, and so on. Eventually all experience companies will charge explicitly for experiences, because you have to align what you charge with what your customers value – and that’s the time well spent that they get from you.
Overall a fascinating read.
A copy of the article is saved here as a PDF for posterity: