Thursday, October 29, 2009

The Right Price, Too Much or Too Little?

On September 13, 2009, Dublinbikes began with an annual subscription of £10 (about $16). In a little over a month, 11,500 Dubliners signed up for annual subscriptions. Expecting fewer than half this number of subscribers in a year, the program ran out of RFID cards trying to satisfy the demand. No program anywhere has had that many requests in such a short period of time, according to The Irish Times. In a few weeks, 60,000 trips have been taken on only 450 bikes.

In the bike-sharing world, what should be the cost of an annual subscription? These costs are as varied as the programs are numerous. What is the right price for the subscription? Admittedly the right price has to contribute to the sustainability of the system. Is it better to have a price that automatically assures the needed level of revenue per bike or per system? In other words make that level by volume. “Elasticity of Demand” is what economists use to start to determine a price. How elastic is the demand for bike-sharing?


On May 12, 2009, Bixi began with an annual subscription of $78 CDN (about $73). In a little over 5 months of service, 10,500 Montréalers have signed up for annual subscriptions. This system is very successful with a range of between 7,000 and 12,000 daily usages of the 4,100 bikes, according to Radio Canada. According to the Bixi website, the 1,000,000th trip was celebrated this week.


The Bixi program with almost 10 times more bikes than Dublinbikes, has been in service five times longer, and is situated in a city with three times as many people, only has about the same amount of annual subscribers as Dublin.

In the more established bike-sharing cities, the annual subscription prices are no more than around $40 as in Paris; Barcelona; and Washington, DC. Lyon, France’s annual fee is less, at around $23. These European cities have annual subscription rates close to 10% of their entire city population. They experience daily ridership levels of 5 to 10 trips per bike per day. The small Washington, DC program with 120 bikes has more than 10 times as many subscribers as it has bikes. Could this be because of price?

Price is a major motivator to join and use bike-sharing programs. The European experience with pricing should be thought of strongly as a new crop of bike-sharing programs begin in Spring 2010. What is the magic price to maximize annual subscriptions to make a large user base without needing a subsidy? Forty dollars seems to be close to the right amount for a large annual user base. Maybe $39.95 would be catchier!

Russell Meddin

images: bixi:calderon on flickr Dublinbikes: bikeradar
statitics: Vélib', Vélo'V, Bicing, SmartBike DC

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