Higher Pricing: The Case for Increasing Per Minute Fees

28th June 2019

Only recently has there been any change in the “standard” pricing offered by most micromobility share-fleets.  In this blog post, I will explain the benefit, or even the necessity, of increasing per minute fees for an independent operator.

Background:

Most electric share-fleets started with a surprisingly low price of $0.15 per minute (or the equivalent) to use a vehicle.  In recent times, this figure has been increased by both Bird and Jump in some locations [1,2], with others likely soon to follow.

Benefits:

From the consumer side, the increases are relatively nominal – typically an increase of $0.10 or $0.15 per minute.  Initially, a prospective operator may not see the significant impact that this shift will have related to their revenue.  However, in the following table, I will demonstrate how this minor change on the individual level can dramatically improve returns.

Results:

As we can see, with a fleet of 200 vehicles, an increase from $0.15 to $0.30 per minute results in a dramatic increase in revenue.  With all other factors being equal, an operator can see an over 70% increase.

An important consideration would be how net profit is impacted.  As all expenses will, presumably, remain unaffected by an increase in pricing, the operator’s profit margin will very clearly increase significantly.  This can reduce the breakeven point for a fleet operator, as well as mitigate any risks related to the ongoing operations of the business.

Conclusions:

Raising prices is inevitable.  Prudent operators will recognize that most riders will accept what is, to the individual, an unimportant increase in fees.  However, to the operator, the compounding benefit is readily apparent.  All operators should consider this critical shift in their business model in order to ensure sustainability and long-term success of their fleet.