The wire transfer department of a bank opened daily at 8:00 AM but had a cutoff time of 3:00 PM for customers to issue wiring instructions so that a funds transfer could be completed that day. Every day, the department was deluged with requests for transfers between 2:00 PM and the 3:00 PM deadline. Some 60 percent of all transfers were done in that last frantic hour, with the result that very little work was done in the first six hours the department was open. This created huge problems in terms of staffing the department. In the morning, staff members were underutilized and sat around waiting for work to do. In the hour between 2:00 PM and 3:00 PM, they were run off their feet, which also increased their chances of making a mistake. The bank wanted to encourage customers to spread out their wire transfer requests over the course of the day to even out the work flow and solve their staffing problem, so it decided to double the price for transfers done between 2:00 PM and 3:00 PM.
The results were surprising. Instead of seeing a redistribution of the time the transfer requests came in, very few customers changed their habits–they simply paid the increased fee. The customers’ own internal processes were geared up to transfer funds toward the end of the day, and they didn’t want to change their processes. The wire transfer department saw its profits increase by 30 percent. The bank discovered that it was providing a different type of value than just transferring funds. It was providing a service with a time-based value–and customers were willing to pay for the value of time.