Last week we discussed Limebike raising its prices to 30 cents per minute. Numerous people have, using their apps, since reported a 25-cent rate. A spokesperson for Lime explains that “As we enter the busy summer travel months, we’ve adjusted our pricing in some markets to ensure that our service is reliable and that we can continue to offer excellent operational support where riders demand it most.” Lime did not explain if our commenter’s experience may have been a poorly timed encounter with congestion pricing or some other sort of trial.
Although company statements and materials are cagey about rates, anecdotal evidence from the app suggests that the typical rate is now 25 cents per minute. Though now a 67% increase over earlier in the year instead of 100%, I believe the rest of the analysis in that post stands.
How is it possible for Lime bikes to be more expensive than Zipcar? I realize they aren’t used in the same way but $15/hr for a rideshare bike is ridiculous.
I think bike service is actually more valuable to the user than a Zipcar, or Uber for that matter. I’ve used bike share when I miss my bus or it’s late, and a bike is the only way to get where I’m going on time because I can avoid traffic. That said, the price is way to high and I don’t plan to use the service any more except in those “emergency” situations.
The charges are new and people aren’t used to thinking about a common cost per mile; they think of bikes and rideshare and zipcar differently and for different uses. It will take time for enough people to realize the bike prices are disproportional to the other prices, plus it’s a different experience riding a bike than riding/driving a car so people sometimes think a bike dollar-mile is a better value because you don’t have to wait for the bike and you can exercise in the open air, and other times a car dollar-mile is more valuable because you don’t want to pedal and it’s unpleasant outside.
Right I know people use and value them differently I’m just wondering HOW a Zipcar, with dedicated parking, insurance, and gas can be cheaper than a bikeshare – all while managing to be profitable – while Lime struggles.
OK, but that’s a question based on costs. Limebike prices are not based on costs but on arbitrary corporate decisions, the number of competitors, and how far it can raise prices before it loses significant customers. The current price can be seen as an experiment of what the market can bear (i.e., how stupid and e-bike-maniac the customers are).
If the marginal cost to Lime per ride were insignificant, we would see a business strategy that would focus on maximizing total revenue, rather than revenue per ride. We would likely see prices near current levels for one-off tourist rides, but we would also see monthly and annual subscriptions, like CitiBike does and Pronto used to do. Just like Comcast, Netflix, and numerous other companies have figured out that monthly subscriptions are more lucrative than pay-per-view, one would think bikeshare would behave similarly.
Instead, we have a pricing model that one would typically associate with a very high marginal cost per customer-trip. There is a reason why grocery stores don’t offer monthly subscriptions for unlimited bottles of milk, and Uber doesn’t offer subscriptions for unlimited free rides – the marginal cost of a bottle of milk and a ride with a paid driver are high enough that it would be very easy for too many people to use their subscriptions too much, causing the company to go bankrupt. Hence, any sustainable business model for selling bottles of milk or rides in a car must require a payment per-milk bottle, or per-car ride, which at a minimum, covers the business’s costs.
The fact that none of the dockless bikeshare companies have offered any recurring subscriptions, once they started switching from pedal-powered vehicles to electric vehicles suggests a very high marginal cost per ride.
So, we start thinking about where this cost likely comes from. The bikes spend the vast majority of the day parked, so each minute of riding has negligible effect on availability. The electricity to charge them is also very cheap – running a 250W motor for 30 minutes consumes 1/8 kWh, which costs about 2 cents. The bikes do undergo a lot of wear+tear, but most of that probably comes from being parked out in the open all day, not actual riding. As a rough guideline, maintenance on my personal e-bike has cost about 10 cents/mile ridden so far, and with a professional bike operation and economies of scale, their cost ought to be less. The cost of the bikes, themselves, are fixed costs, not marginal costs, to the extent that how quickly they wear out is determined by the number of days on the street, as opposed to the number of miles ridden. Permit fees imposed by the city are also fixed costs, since they’re per-bike, not per-ride.
That leaves only one thing left, and that’s labor of sending crews of people around in cars or trucks to chase after the bikes, remove broken or illegally parked, bikes, swap batteries, drive broken bikes to the maintenance shop, and distribute new/repaired bikes in areas of high expected demand. It’s hard to say how much this is per ride, but it is reasonable to assume that the further they’re ridden, the further they have to driven back to where they were before (to maintain high availability there). Also, the limited battery life means that, at a minimum, every bike must be visited by a crewmember in a car/truck at least once per 40 miles ridden – (the batteries last 50 miles, but if they don’t want them to die in the middle of a ride, they need to replace them after 40). It is all that labor cost for managing the fleet that is the Achilles Heal of dockless bike share, and that is, I believe, why a dockless bike costs no less to rent for an hour than a dockless car – the car is a much more expensive vehicle, but requires orders of magnitude less labor to manage. If users do the refueling in exchange for discounts (which costs much less than paying an employee to do it), a carshare company might only need to physically visit the vehicle once every several months, unless there’s some sort of complaint. In an economy like Seattle, it is the cost of labor, not physical goods, that ultimately determines the cost of doing business.
At the same time, the counter-theory of a greedy corporation trying to milk the cow doesn’t seem right here. For starters, “milk the cow” prices is generally what you’d expect of a monopoly, and Lime is definitely not a monopoly. Not only do they face direct competition in the dockless bikeshare arena from Jump, but they also have to compete with other sources of bikes and other forms of transportation. For example, short trips have to compete with walking, while longer trips have to compete with rideshare services like Uber and Lyft, carshare services like Car2Go, and, of course, public transportation. At least for locals, all trips also ultimately have to compete with users riding their own bike, and tourist trips have to compete with bike rentals offered by hotels and local bike shops. For many trips, Lime bikes have to compete with users driving their own car (and searching for and/or paying for parking).
Even if we ignore the direct competitor, Jump, it is clear that $0.25/minute is hitting the level where Lime just doesn’t compete well with other modes of transportation. Yes, there are some cases, where it is still competitive – when you’re in a hurry, the bike is right there, traffic is at a standstill (making bus or Uber not ideal), and bike lanes and/or trails are available to bypass the traffic. But, those cases are rather unusual. The vast majority trips, it’s just not worth it.
Of course, price hikes in the short term are going to make money off of people who don’t realize the prices have gone up so much, and might not notice their bill right away. But, that’s only in the short-term. In the long term, people will notice and make their decisions on which mode of transportation gives them the best value for the money, and $6 to ride a bike for 20 minutes is generally not good value for the money, compared to alternatives.
A local company that cares about the community’s concerns and tailors its product to our needs might have more success, and more people willing to pay for them because the money stays in the community.
It does appear like the latest increase from 25 cents per minute to 30 cents per minute has indeed been rolled back. But, the remains that most trips over 3-4 miles long are still now more expensive on a Lime bike than on a Lime car.
One reason I think the service is so expensive that rebalancing to ensure bikes are always in the highest demand areas effectively means that every bike trip requires a Lime staffer to make an equivalent car trip to bring the bike back. Hence, the fare for the bike trip must cover the cost of hiring a paid driver to travel the same number of miles, hence the fare must be comperable to Lyft and Uber.
If I’m right, then the sustainability benefits of bikeshare are not at all what it’s made out to be.
Ultimately, a more sustainable bikeshare would avoid active fleet rebalancing as much as possible, in favor of user incentives to return bikes in areas where they are likely to get ridden. Areas where bikes tend to cluster, never be ridden, and have to be trucked out of should just be removed from the service area altogether, to hold prices down. Similar, for charging. A more sustainable model offers users free rides for charging batteries in their home, rather than relying on paid labor to constantly swap batteries out.
Jump bikes are marked with a special symbol on the fleet map when they need to be relocated a short distance away. Jump lets you ride it for free and credits $1 credit to your account. It’s kind of fun to do on a nice-weather night.
Lime used to do that too, with the non-electric bikes that tended to pool at the bottoms of hills. Not sure what happened, but it went away.
Honestly, with the price increase resulted in a seven-dollar ride down the Burke-Gilman to breakfast one day, I turned off auto-reload, used up my balance and quit taking them.
With taxes, a 20 minute Lime bike ride costs over $7. That’s ridiculous. As a result, I’m using the service less frequently.
My last ride was from Denny Triangle to Interbay and cost over $9. Yikes.
I’ll probably still use Lime bikes for <2mi trips where I'm in a hurry and don't want to walk or wait for an Uber, but the price increases over the past year have eliminated at least 50% of my Lime trips.
I took my folding bike back to my office after the Lime increase. It was a very nice year or so when the service was very convenient and well-priced. I used to pay $85/year for Pronto, but I think neither price was sustainable.
They didn’t do a commensurate raise to the price they are paying their independent contractors for charging their scooters. They started out last year paying $5+ per scooter, then lowered it to $4+ this year. When you take out your time, gas, electricity…you are making minimum wage most nights.
The business model of using paid labor to chase down every scooter every night for charging is broken. If the fares are to be high enough to pay for people to go around in cars and chase after the scooters, they’re almost high enough to just pay someone to drive you where you want to go, and not even bother with the scooters.
For the business to be sustainable, they have to find a way to get the cost of charging way down. Maybe some technological breakthrough will allow them to do it with solar panels. Or maybe they have to go back to docks, which can plug into the electricity grid. Or maybe breakthroughs in technology allow bigger batteries that only need charging every month, rather than every day. I don’t know, but something has to give, or the business won’t survive.
A pricing model that’s prohibitively expensive except for emergencies won’t get many users, once people wake up and realize how much they’re paying.
[ah]