A bikeshare system’s operating costs reflect its size and sophistication. The city will need to
estimate (and work to minimize) operating costs if it plans to manage the system through a
public-private partnership that includes some cost-sharing. Otherwise, operating costs fall
completely to the operator(s), and the level of transparency around those costs will vary. As
part of an MOU or permit application process, cities should require operators to provide
estimated operating costs and proof of financial ability to shoulder those costs.
Rebalancing is by far the most significant operating cost, but others include staffing,
replacement parts, fuel for service vehicles, marketing, website hosting and maintenance,
electricity and/or Internet connectivity for stations, membership keys, warehouse and storage
insurance, and administrative costs. Depending on the contracting structure, the operating
costs may also include debt service.
A bikeshare system’s operating costs reflect its size and sophistication. The city will need to
estimate (and work to minimize) operating costs if it plans to manage the system through a
public-private partnership that includes some cost-sharing. Otherwise, operating costs fall
completely to the operator(s), and the level of transparency around those costs will vary. As
part of an MOU or permit application process, cities should require operators to provide
estimated operating costs and proof of financial ability to shoulder those costs.
Rebalancing is by far the most significant operating cost, but others include staffing,
replacement parts, fuel for service vehicles, marketing, website hosting and maintenance,
electricity and/or Internet connectivity for stations, membership keys, warehouse and storage
insurance, and administrative costs. Depending on the contracting structure, the operating
costs may also include debt service.
7.2.1 STAFFING
Staffing needs include administration and management, maintenance, rebalancing, and
customer service. Staffing costs are often heavily dependent on local norms and the cost of
employment in a city or country. Mechanics, rebalancing staff and station technicians for
station-based systems in major US cities such as New York, Chicago, Boston and Washington,
DC are part of the Transportation Workers Union, which establishes protections around safety
and scheduling predictability, as well as higher wages and an elected workers’ council.[50] Cities
should consider establishing standards for bikeshare staff compensation in their permit
requirements, MOUs, or contracts with private operators.
At least one full-time staff person (or contractor) should be hired by the implementing agency
to manage the bikeshare system (i.e., communicate with operator(s), monitor permit, MOU or
service-level compliance, attend public meetings and events, etc.). Optimally, an additional
staff member would be responsible for community outreach and education to encourage the
uptake of bikeshare citywide and to help establish norms of behavior.
7.2.2 REBALANCING
Rebalancing is broadly defined as the relocating of bicycles from stations that are near or at
capacity to stations that are close to empty. Successful rebalancing is critical to the viability of
the system from the customer’s perspective, and is one of the greatest logistical challenges of
operating a bikeshare system. Rebalancing can account for anywhere from 30% to over 50% of
operating costs.[51] If an operator has an adequate IT system, rebalancing becomes predictive, and
is better thought of as pre-distribution—the movement of bicycles to areas where users will need
them and away from areas where users will be dropping them off.
Onboard GPS technology and machine learning capabilities have been introduced to try to
more accurately predict demand and reduce the logistical and financial challenges of system
rebalancing. Pricing incentives, such as free rides, credit points, or even credit balance, can also
be used to incentivize users to help rebalance bikes. This is typically marketed as a “challenge”
or other promotional event to users, with certain bikes identified in-app as being free or a
reduced fare if they are ridden to a specified area. Stations may also carry price incentives (e.g.,
ending a trip at a station far outside of the downtown core during the weekday to help rebalance
bikes from stations heavily used during the morning rush hour).
While a bikeshare system may operate 24 hours a day, most trips occur between 7:00 a.m. and
9:00 p.m. During those periods, rebalancing may be necessary, especially for stations that
experience high peak-demand. For example, most systems have found that stations at the tops
of hills are often empty, as people will check out a bike and ride down the hill, but will rarely ride
up the hill to park at that station. A similar phenomenon occurs with dockless bikes gathering at
the bottom of hills. Many systems, however, try to do most of the rebalancing at night, when less
traffic makes moving around the city more efficient. Regardless, a system for rebalancing bikes to
the locations of greatest use is essential, taking into consideration initial data and modeling and
expectations of ridership. The operator should not expect to rebalance the system perfectly from
the start, but rather should make the best plan according to generated trip data and refine that
plan after the system is implemented, as well as following any significant expansions. Targets for
rebalancing and bike (and dock) availability should be included in contract service levels, MOUs,
or permit requirements. See section 6.4: Enforcement for more on setting and adjusting levels of
service to yield desirable operations outcomes.
7.2.3 MAINTENANCE
Maintenance is another large line item under operational costs. Maintenance includes the
bicycles and stations (if used), and covers both preventative and repair activities. This can be
as simple as wiping down bikes and sweeping around stations, or as complex as lubricating the
hubs of the bicycles and fixing the electrical equipment in the station terminal. General repairs
to docks and terminals include replacing torn decals or removing graffiti, while bicycle repairs
include fixing tire punctures, broken chains, and faulty brakes.
Safe, high-quality bicycle maintenance and repair are critical to the reliability and image of a
bikeshare system. For that reason, repair centers must be located strategically within the city,
and there must be a strong logistical plan for quickly moving bikes to and from those centers.
Mobile maintenance units can also be incorporated into rebalancing efforts to carry out simple
repairs. At one time, Paris used a barge to fix and maintain bicycles while rebalancing them
from the lower end of the city to the higher end. Founded in 2008 in Montreal, social enterprise
company Cyclochrome maintains BIXI bicycles and also provides accredited technical training
in bike mechanics to teens.
Maintenance protocols—including penalties for noncompliance—should be spelled out in the
service-level agreements in the contract between the implementing agency and the operator,
or in the permit requirements for operators.Generally, the implementing agency will ask the
operator(s) to develop or meet a maintenance and repair protocol that ensures that users only
experience bikes in top form no matter where they begin their trip. For example, the contract
or permit language should stipulate how long a broken bicycle may be left at a station or on
the street, how long a terminal or docking space can be out of commission before the operator
faces a penalty (for station-based systems), or how long a bike can be parked without being
ridden (i.e., due to malfunction or low demand) before the operator has to relocate it (for
dockless systems). Contracts or permits should also require the operator(s) to provide data on
maintenance requests and actual repairs. For broken bicycles, six to twelve hours is usually an
appropriate time frame to expect the operator to address the issue.
Prompt response to maintenance requests can be facilitated in a variety of ways, from high-tech
to low. These approaches have associated costs, as well. Most station-based systems’
kiosk screens enable users to alert the system that there is a problem with a bicycle at that
station. Once a user reports a faulty bicycle, it is taken offline (meaning it cannot be checked
out) and the operator is notified. Some systems ask users to turn the seat around on the bike
that needs repair so that the maintenance or rebalancing vehicle can easily identify it, as is
done in Seville, Spain. While more costly, technology-based notification portals used by most
dockless bikeshare operators that enable users to report broken or mis-parked bikes, along
with the bike’s GPS location, can be more effective.
7.2.4 CONTROL AND CUSTOMER SERVICE CENTER
For public and publicly-procured systems, software can be purchased outright, developed, or
licensed, and each option will have a different impact on the capital costs and the longer-term
operational costs. Developing software is the most expensive option, though the intellectual
property can often bring medium-term return on investment through the sale or licensing of
the software to other systems. Buying off-the-shelf software has become popular at a regional
level. Although this is initially more expensive, it is a one-time cost, with perhaps an annual
service cost. 8D Technologies, which is now part of bikeshare operator Motivate, provides
Motivate-operated systems with their software. Montreal’s and Minneapolis’ systems, while
not operated by Motivate, license 8D software through a software as a service (SAS)
agreement. Noa Technologies, another software company, offers a cloud-based platform to
better manage bikeshare fleets and reduce operational and logistics costs.
Another option is licensing software. Licensing software can be a good initial solution
to help offset capital costs, but can be a cost burden on the system down the line.
The Medellín bikeshare system used software licensed from Santiago, Chile’s bikeshare for a
year before developing its own software. With licensed software, the software company is
responsible for making sure that the software continues to be updated with the latest security
and advances in technology. Sometimes the software is bundled into the cost of the hardware,
as is often the case in China.
Decisions about software in privately-operated systems will be made by the operator(s). In
these cases, cities should establish baseline requirements for software security.
7.2.5 MARKETING AND CUSTOMER INFORMATION
Another important operational cost to consider is promotional material and marketing
activities associated with running the system. These can range from simple printed
information to elaborate campaigns across various media (see subsection 5.1.3: External
Marketing). This component is particularly important during the first six months (defined as
the two months prior to launch and four months after launch) and whenever there are any
changes to operation or expansions of the system. For publicly-operated systems, sustained
membership campaigns—specific initiatives to attract new members—also pose costs,
especially when led by an outreach coordinator or other relevant city staff member. Operators
of privately-operated systems assume the bulk of marketing costs to promote their service
and attract new users, however, in these cases, cities should budget for periodic promotions to
encourage cycling in general, and bikeshare in particular.
7.2.6 INSURANCE (ANTI-THEFT, ACCIDENTS, VANDALISM)
Riding a bike presents a level of risk to the rider, and the user of a bikeshare system has
engaged in an implied contractual relationship with the system (and/or the operator), putting
the system/operator at potential risk of legal liability in the case of harm. For that reason, it is
strongly advised that a carefully crafted conditions-of-use document be included in the
contract or permit requirements for the system. However, accident insurance is also important,
and some level of anti-theft insurance is also advisable. For city-owned/operated systems, the
cost of this insurance must be part of the operating budget, and system planners should seek
advice from trusted legal counsel to decide what coverage and at what levels is necessary.
Private operators should be required to show proof of insurance to the city before being
granted a permit to operate. Insurance varies from country to country, and someone with local
knowledge on this issue should be consulted.
Some operators estimate a 10% annual theft rate, and integrate the costs of replacement
bikes into their financial models. In some systems, deposits or liability holds are placed on a
user’s credit card to encourage the proper use and return of a bike. This has not shown to be
very effective in deterring irresponsible behavior, however, and poses a significant
accessibility challenge to low-income riders (see section 5.3: Ensuring Equity by Reducing Barriers to Entry).
System planners and operators should also take steps to reduce instances of vandalism.
Perhaps the best insurance is a strong communications and marketing plan that generates
widespread public acceptance of the system and encourages residents to take true ownership
of and pride in the system. Framing bikeshare as an extension of transit that is available to and
used by residents and visitors alike reduces the notion that the system is primarily designed
for certain privileged groups. Many private dockless companies including Mobike, oBike, and
ofo disincentivize destructive user behavior through a scoring system linked to each user’s
account. Users are rewarded for “good” behavior like parking a bike correctly, and consistent
use. Violations such as incorrectly parking a bike, using a private lock, taking a bike into a
residence or office, and theft reduce a user’s score, and falling below a certain threshold
substantially increases the user’s price per trip (from US$1 to US$20 per trip for Mobike users)
until the user’s score improves. Serious vandalism, such as damage or graffiti, can often be
difficult to attribute to a specific user, so this type of penalization strategy likely would not
deter such activity. Cities in which graffitti is widespread should expect that bikeshare assets
will not be immune. Thus, cities should have a plan in place to deal with vandalism as soon as
possible, or have clear permit requirements for operators to act within a certain time frame to
address vandalised or damaged bikes. In addition, private operators should be motivated to protect
their brand and will likely benefit from addressing these issues as soon as possible.
