Citibike Economics
Citibike Economics
With the warming weather and the raging pandemic, I finally bought an annual Citibike membership. I've been using Citibike on occasion since I moved to New York a couple of years ago, mostly through Lyft's mobile app (Lyft acquired Citibike).
A single ride costs $3. Since I've been using it more than ever, I wondered if an annual membership, which costs $165 for unlimited usage, was worth it. The obvious calculation here is: how many single-rides do you take in a year to justify the $165 annual fee? At $3 a ride, I'd have to take 55 rides. Let's say I don't bike when it's cold every year for 4 months, that's 8 rides a month or 2 rides every week. With COVID, this was a no-brainer. I was easily already doing more than 8 rides a month.
So, I got my annual membership at the end of May, and I just looked at the number of trips I've taken in the 2 months since.
I have already taken 55 trips! How had I underestimated my usage so much? The estimate had missed by almost 4x! 55 expected trips in 8 months vs. 55 actual trips in 2 months.
I live 8 minutes away from the subway by walking. It's a boring walk despite being quaint in a Carroll Gardens way. There's a Citibike dock right outside the subway and one couple of minutes away from me. I only save a few minutes by biking but it's a lot more fun to bike so I do it. As you can see on the graph below, there are ~18 trips over 10 mins, roughly in-line with 8 trips/month to break even over 2 months.
But there are 35 rides under 10 minutes. I'd guess that 80% of those rides would not have happened if I didn't have unlimited usage. I wouldn't pay $3 just to ride a few blocks when I could just walk. But now with the membership, each ride has no additional cost so I changed my behavior to accommodate the new economics of biking.
Unlimited usage fundamentally changes user behavior.
So. What's the true value of the Citibike membership? The value I get from an annual membership is definitely NOT $720 (30 rides a month X $3 a ride X 8 warm months). But it isn't quite the current cost of $165 either.
At $165, I am a very happy customer and Citibike could probably boost prices.
But to do that, they'd have to do a better job selling the Citibike lifestyle rather than Citibike as a transportation option. They'd have to get people to stop asking the question, as I did at the start of this post, "How many single-rides do you take in a year to justify the $165 annual fee?"
If I ran Citibike, what I would honestly do is offer every New Yorker a 1 month trial for say $9. Once you become a part of people's lives for a month, people start changing their behavior and they start taking 30 trips a month, the annual fee will feel like nothing. People will get a feel for Citibike as a great alternative to walking when weather's nice out. And as a way to expand their local range.
Going back to paying $3 a ride will be hard.