The case for increasing per-minute fees

laptop with money

Only recently has there been any change to the “standard” pricing offered by most micromobility share fleets. Therefore, it’s time to explore 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 his or her revenue. However, in the following table, we demonstrate how this minor change on the individual level can dramatically improve returns.

revenue based on fleet size of 200
revenue per minute on average

Results

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

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 break-even 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.

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