I was sending something via [1] FedEx today, and I noticed something interesting about the carrier’s rate schedules. Thanks to the [2] Rate Finder, I was able to find rates and transit times to send an envelope from Houston to South Bend, Ind. For the sake of discussion, I’ll make the following assumptions:

• I drop the package off at the last possible dropoff time (8:00 p.m. for the location near me).
• The package arrives at its destination right on the deadline.
• The origin and destination are in the same time zone, and they’re both included in “most cities.”

Here’s the data:

Graph the points, and here’s what you get:

Look at the marginal values, and here’s what you get:

This is really the meat of it. Upgrading from the cheapo service to 2Day, Standard Overnight or even Priority Overnight costs a few cents for every hour of improved speed. After all, if you’re torn between 2-day and 3-day service, the package isn’t all that time-sensitive.But First Overnight costs more than $16 per hour of improvement over its cheaper brother, Priority Overnight. I wouldn’t think there are too many situations where 10:30 a.m. isn’t fast enough, but 8:30 a.m. is.

That said, if you’re in one of those situations, it really “absolutely, positively has to get there” first thing in the morning. FedEx knows that in that kind of right-down-to-the-wire, pressure-cooker situation, people will pay. A lot.