Could Value-based Pricing Improve Economic Sustainability of Bikeshare?

Mohan Venigalla; Siddartha  Rayaprolu; Thomas Brennan; Shruthi  Kaviti

doi:10.13021/jmms.2020.2709

Authors

Mohan Venigalla Professor, George Mason University
Siddartha Rayaprolu George Mason University
Thomas Brennan Professor, The College of New Jersey
Shruthi Kaviti Associate Professor, Institute of Aeronautical Engineering, Hyderabad (India)

DOI:

https://doi.org/10.13021/jmms.2020.2709

Keywords:

decoy pricing, value-based pricing, behavioural economics, bikeshare, capital bikeshare, pricing, micromobility, shared mobility, revenue, ridership

Abstract

We scrutinize the reactions of casual users of bikesharing services to fare menu, product pricing, and promotion. We hypothesize that by introducing value-based pricing into the fare-option mix, revenues can be increased and therefore enhance the economic sustainability of the bikesharing system. We conducted a controlled experimental survey of 157 current and potential bikeshare users across six cities in the United States. The survey registered the respondents’ choice of fare options in two groups: one with a binary choice set (control group) and the other with an additional value-priced choice (experimental group). Evidence points to users’ perception of value in bikeshare fare options would contribute to variations in revenues for the same ridership levels. Revenue projections and statistical tests showed that the introduction of value-based pricing options could lead to significant revenue increases. Furthermore, how the fare options are presented to the user would have an impact on users’ reception to the value-based pricing options in the product mix. The study results could be useful for numerous bikeshare systems in re-examining their product mixes and how they are presented to the users on websites, mobile apps and kiosk locations.

Author Biography

Mohan Venigalla, Professor, George Mason University

Professor, Transportation Engineering

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