The Convenience Theorem

A groundbreaking economic framework for understanding and pricing convenience in markets

Developed by Dillan Mori and Michael Chase, this theorem establishes that products offering superior convenience should command proportional pricing premiums based on quantifiable convenience value.

Learn the Theory Try the Calculator
Vending Machine
$2.50
vs
Gas Station (10 min away)
$1.75

Key Concepts

The Convenience Theorem

Products offering superior convenience relative to alternatives should be priced to reflect the quantifiable value of that convenience to consumers.

Price-to-Convenience Ratio

A standardized metric (PCR) that measures how efficiently convenience is priced: PCR = Full Price ÷ Convenience Value

Convenience Value Formula

CV = α(Distance Saved) + β(Time Saved) + γ(Effort Reduced) + δ(Risk Avoided)

Understanding the Convenience Theorem

The Theorem Statement

"A business offering superior convenience relative to competitors should set prices to maximize value capture from the quantifiable convenience it provides. Optimal pricing occurs when the convenience premium reflects the full economic value delivered through distance saved, time saved, effort reduced, and risk avoided for customers."

The Mathematical Framework

1. Convenience Value Calculation

CV = α(Distance Saved) + β(Time Saved) + γ(Effort Reduced) + δ(Risk Avoided)
α (Distance Weight): Monetary value of travel distance saved
β (Time Weight): Value of time saved based on hourly worth
γ (Effort Weight): Value of physical/mental effort avoided
δ (Risk Weight): Value of risks avoided (security, weather, etc.)

2. Price-to-Convenience Ratio

PCR = Full Price ÷ Convenience Value
PCR < 0.5 Underpriced - significant opportunity to capture more convenience value
PCR 0.5-1.0 Well-priced - capturing reasonable portion of convenience value
PCR > 1.0 Overpriced - may exceed customer willingness to pay for convenience

Real-World Applications

Retail Pricing

Optimize pricing strategies for convenient locations like airport shops, vending machines, and convenience stores.

Location Analysis

Evaluate the economic value of different business locations and justify rent premiums.

Consumer Decisions

Help consumers make rational choices by quantifying the value of convenience they receive.

Market Research

Analyze competitor pricing strategies and identify market opportunities.

Price-to-Convenience Ratio Calculator

Calculate the PCR for any convenience pricing scenario

Product Information

Convenience Factors

Round trip distance to alternative location
Total time saved including travel and shopping
Value of avoiding parking, walking, waiting, etc.
Value of avoiding weather, security, or other risks

Personal Weights

Used to calculate time value
IRS standard rate is $0.65/mile

Calculation Results

Real-World Examples

See how the Convenience Theorem applies across different scenarios

Airport Convenience Store

Scenario: Water bottle at airport shop vs. outside convenience store

Airport: $4.00
Outside: $1.50

Convenience Value:

  • Time saved: 45 min × $30/hour = $22.50
  • Security re-screening avoided = $15.00
  • Risk of missing flight avoided = $8.00
  • Total CV: $45.50
PCR = $4.00 ÷ $45.50 = 0.088 Excellent Value!

Highway Gas Station

Scenario: Gas at highway exit vs. driving 5 miles to town

Highway: $3.85/gal
Town: $3.45/gal

Convenience Value (per gallon):

  • Distance: 10 miles × $0.65 = $6.50
  • Time: 20 min × $25/hour = $8.33
  • Effort reduction = $2.00
  • Total CV: $16.83/gal
PCR = $3.85 ÷ $16.83 = 0.229 Great Value!

Office Building Café

Scenario: Coffee in office building vs. café across street

Office: $5.50
Across Street: $4.25

Convenience Value:

  • Time saved: 8 min × $40/hour = $5.33
  • No elevator wait/security = $2.00
  • Weather avoidance = $1.00
  • Total CV: $8.33
PCR = $5.50 ÷ $8.33 = 0.660 Fair Value

About the Developers

Dillan Mori

Co-Developer

Co-owner of SouthVend Vending Company and Master of Science in Finance student at the University of Notre Dame, graduating May 2026. Received a well-rounded undergraduate degree from Holy Cross College.

Michael Chase

Co-Developer

Co-owner of SouthVend Vending Company and Business Analytics student at the University of Notre Dame. Received a well-rounded undergraduate degree from Holy Cross College. Co-developer of the Convenience Theorem and contributed to the mathematical formalization and practical applications of convenience valuation in economic theory.

Development Background

The Convenience Theorem emerged from observations about pricing inconsistencies in convenience-based markets. Mori and Chase recognized that while spatial economics had established the importance of location in pricing, there was no standardized framework for quantifying and pricing convenience across different dimensions.

Their work builds upon established economic theories including Hotelling's spatial competition model, but introduces a novel quantitative approach to measuring convenience value through multiple factors: distance, time, effort, and risk avoidance.

Related Economic Literature

  • Hotelling, H. (1929). Stability in Competition. Economic Journal, 39(153), 41-57.
  • Eaton, B.C. & Tweedle, J. (2012). A Hotelling style model of spatial competition for a convenience good.
  • Copeland, M.T. (1923). Relation of consumers' buying habits to marketing methods.

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