Understanding the pricing strategies of scooter sharing operators

In this article, we take a closer look at pricing strategies of scooter sharing operators. What are the main actions that are priced? Is there an industry standard on pricing? We look at both regular priced behavior such as users’ registrations and rental times and at unplanned actions such as traffic offenses.

Pricing strategies are still in their early days

As free-floating electric scooter sharing is still a rather new development in the market of urban mobility, pricing is applied in a very simple and straightforward manner. Different stages of the customer journey are priced individually. Let us look at the two most prominent priced actions of a user’s journey; the registration and the riding time.

Some operators charge for registration

As of now, the user starts by creating an account with an operator, registering with their ID and driver’s license. Some operators allow a free registration, others charge a fee which can be up to 10 € and includes a certain amount of prepaid riding minutes that are credited into the user’s account. Some operators such as ZigZag charge a particular registration fee for foreign drivers’ licenses due to higher processing costs.

The clock is ticking

For the rental period, all pricing models within the scooter sharing market are based on a per minute (as opposed to per km) method. By analyzing 14 European scooter sharing companies, we found an average price of 24 cents per minute. During the trip, most sharing operators enable their users to park the vehicle at a reduced rate.

Just as prices for beer, coffee or big macs vary across cities, the prices for a minute on an electric scooter can be different as well, depending on the purchasing power of citizens and other local cost factors. To give an example, eCooltra charges 0,26 € per minute in Barcelona, Madrid, Valencia and Lisbon, and 0,29 € correspondingly in Rome and Milan.

Most operators offer discounted minute packages

Examples are either a prepaid minute package or a daily usage package. The former is a certain amount of minutes, with the price per minute decreasing when users choose higher minute amounts. To give an example, Cityscoot offers a prepaid minute package to their customers, who can pay 22 € for 100 minutes (resulting in 0,22 € per minute). This way, they save 7 € compared to paying the regular price per minute of 0,29 €. A daily usage package means that a customer can use a scooter for 24 hours without exceeding a certain cost threshold. Emmy offers a daily price for a scooter of currently 29 €.

So far we elaborated on priced user behavior that is both planned and expected by the operators and the users themselves. However, we also need to look at unplanned, irregular user behavior, leading to penalty fees for the riders.

Be gentle, although it’s a rental!

Riders are charged extra fees in case of violations towards rental agreements or traffic laws. Responsible users are charged fixed amounts for incidents such as unlawful movement of parked scooters, or processing fees for traffic offenses. Other penalty fees concern the cleaning and repair of scooters caused by a specific user, or the loss of helmets.

Every rental trip is insured by default. However, if the user is responsible for an accident, they are liable with a deductible depending on the scooter model used. For example, rides offered by Emmy are ensured with a user deductible of maximum 350 € for the Govecs “Schwalbe” model (Emmy, 2019).

Now that we learned how pricing strategies are designed and what the most common prices in the industry are, one question remains: At what point in time do users actually have to pay?

The billing point depends on the amount payable

To clarify, pricing refers to the cost of the service incurred by the user whereas billing refers to the interval between the processing of payments. As long as the customer is not making use of prepaid packages as described before, the billing procedure may depend on the amount payable.

Sharing operators usually aggregate smaller amounts (generated by short rides) in order to charge the total sum to the user once a month. As they have to bear payment operator fees for every transaction between them and their customers, it is not worthwhile to charge scooter riders instantly for short trips. For example, Emmy aggregates the payable amounts for rides that generate less than 10 € of revenue, to charge the total amount once a month.

So, what have we learned about pricing strategies in the scooter sharing market?

Prices for scooter sharing are simple and very similar amongst operators

The longer users drive, the more they pay. This is a pricing model very easy to understand for both the operator and its customers. However, it is questionable if this simplicity enables a sustainable growth of customer base and thus, business operations. At this stage it seems unlikely for a user to choose a scooter sharing operator based on the price per minute, as all pricing models, actual price values and service offerings are so similar.

Moreover, increases of prices per minute that may be necessary at some point to grow revenue, may be perceived very negatively by users. So, does it really make sense to charge per minute or should the urban commute be rather charged — for example — in the form of a monthly subscription? We will dedicate our next blog post to the topic of how we could rethink the value of urban transportation.

As always, we’re happy to keep the discussion going through any critiques or additions you may have, so please do not hesitate to get in touch. We believe our insights should be like the future of mobility: shared!

This article is published by unu. Find out more about what we offer by visiting share.unumotors.com