After decisions on system size and type are made, an initial financial analysis can be undertaken.
This analysis asks whether the system will be financially sustainable, and usually considers the
estimated capital outlay, projected revenue, and operational costs. It should also consider the
advantages and disadvantages of different financing mechanisms. The following recommendations
assume that some financial cost (and revenue) will fall to the city; however, many private dockless
bikeshare operators are able to provide bikeshare services without public funds. Indirect costs to
the city to oversee, monitor, and enforce regulations on dockless bikeshare are likely. The city will
also not receive a portion of revenues from a fully private system, but may receive some funds
from dockless bikeshare operators in the form of permit application, non-compliance, and/or inlieu
fees. It is recommended that cities pursuing a system operated by one or more private
companies require those companies to demonstrate their long-term financial sustainability as part
of a permit application or MOU process (see section 4.2: Planning & Regulating Dockless Systems for more details about permit requirements).
3.3.1 ESTIMATING COSTS AND REVENUE FOR PUBLICLY FUNDED SYSTEMS
For station-based systems, an estimation of capital costs and operating costs can be
calculated by multiplying the number of bikes, docks, and stations against an average cost for
each type of asset. Capital and operating costs are a function of system technology and are
straightforward to determine, but revenue depends on usage levels and can only be fully
estimated in the infrastructure planning stage. Usually the revenue scenarios are based on
expectations of demand using both a conservative estimate (in which demand, and therefore
revenue, is low) and an optimistic scenario (in which demand projections are higher, resulting
in higher projected revenue).
Capital & Operating Costs per Bike
Useful to estimate costs during system planning
Capital costs are often expressed in terms of the “cost per bike,” defined as the total cost of
the system—including stations, bikes, rebalancing equipment, the control center, and other
equipment—divided by the total number of bikes in the system.
Operating costs vary widely from system to system and from city to city. Operating costs are
commonly expressed annually per bike and can vary based on rebalancing mechanisms and
needs, maintenance and labor costs, administration, technology servicing, etc. Estimates from
2011 peg operating costs at around US$1,760 per bike per year, but more recent estimates
range between US$900-$3,500 annually per bike.
Operating Costs per Trip
Useful to analyze system performance after launch
The cost-per-bike estimate may be useful in the planning stage to size the system financially,
but to analyze system performance after the system launches, a per-bike analysis is not
recommended because bike fleet size varies from day to day. Some have used the per-dock
metric for analyzing annual operating costs as a more stable, and therefore, more comparable
basis.[27] However, this guide recommends evaluating the cost efficiency of a system after it
opens by looking at operating costs per trip. For example, Washington, DC and Denver have
similar operating costs per trip (US$2.55 and US$3.24 respectively), while operating costs per
bike are very different (US$3,445 and US$1,560 respectively). Washington, DC has slightly lower
per trip costs, but its per bike costs are more than double that of Denver’s. Mexico City, on the
other hand, has much lower operating costs per trip (US$0.62) and per bike (US$913) than both
Washington and Denver. Like other transit systems, the goal of bikeshare is to attract and
move as many people as efficiently as possible; therefore, a system’s operating expenditure
should be based on the number of people—as expressed in the number of trips—using it. Most
transit systems express their costs this way.
Bikeshare Economic Performance
More dense bikeshare systems (both in terms of stations and bikes) tend to have lower
operating costs per trip than less dense systems. Paris and Mexico City are good examples of this trend. London’s relatively high station and bike densities and high operating cost per
trip may signal higher-than-usual rebalancing needs, labor costs, etc.
ESTIMATING REVENUE
Uptake Rate
Used to estimate demand for the system
To estimate revenue, multiply the demand estimations for usage against the proposed revenue
structure. Demand is often estimated using an uptake rate, which is an assumption of the
percentage of people who will use the system compared to the total population within the
service area. Commonly used uptake rate estimates include: a conservative 3% uptake rate,
a middle estimate using a 6% uptake rate, and an optimistic scenario of 9%. Washington, DC’s
Capital Bikeshare has an uptake rate of about 5%. Mexico City’s Ecobici is close to 10%, which
may be explained by the heavy commuter population that enters the service area (and uses
Ecobici) but does not live within that area.
Farebox Recovery
Used to evaluate a system’s financial health
The financial health of a system can also be evaluated by the percentage of operating costs
that are covered by membership, security deposit and user fees. This metric, known as farebox
recovery, measures the degree to which a bikeshare system is self-sustaining. Most publiclyfunded
station-based systems do not meet their operating costs through membership and
user fees alone, although some do come close. This is also the case for most public transit
systems. Farebox recovery can be used to determine the degree to which other revenue
sources, such as advertising revenue, government subsidies, and system sponsorship, will be
needed to cover operating costs.
Trips by Type of User
A financial analysis of a bikeshare system should consider what percentage of total trips will
be taken by long-term members, and what percentage by casual members. In most systems,
casual users are charged a significantly higher price per trip or per day than annual users,
making casual users the source of more revenue per trip even if in numbers they are not the
largest user group. Casual users are often less familiar with the bikeshare system and are
therefore more likely to accrue fees for exceeding time limits. While the system benefits from
overtime charges, customers who inadvertently accrue fees will likely be unhappy and may not
use the system again. Typically, as a system grows, the percentage of casual users declines as
some casual users purchase annual memberships.
3.3.2 FINANCIAL PLANNING FOR PRIVATELY FUNDED SYSTEMS
ESTIMATING COSTS
For privately funded bikeshare systems, capital costs to the city are nominal. In-kind costs,
however—which could include staff time to oversee the permit application review process,
attend public meetings on behalf of the city, enforce permit requirements, remove or re-park
bikes, etc.—are likely. Some of these costs can be offset if the city decides to charge fees to
bikeshare operators, as detailed below.
It is worth noting that privately-funded dockless bikeshare may be more economically scalable
compared to station-based systems because of the vastly lower capital costs required. Some
dockless bikes only cost about US$200 each, and the most expensive dockless bikes on the
market – JUMP’s smart pedal assist e-bikes – cost US$1,500 each (compared to approximately
US$5,500, which includes bike and station costs, for station-based systems like Citi Bike and
Vélib’). Lower capital and operating costs could enable dockless systems to offer coverage to
more parts of the city, especially in previously underserved or lower-income neighborhoods.
ESTIMATING REVENUE
Without public investment in bikeshare operations, the city will not receive revenue from
traditional streams such as sponsorship or advertising. Instead, limited revenue may be
generated from one or more of the following fees. It is highly recommended that, to avoid
corruption or improper regulation, bikeshare staff tasked with assessing fines are not
compensated with and do not directly benefit from revenue generated from those fines.
Annual permit fee
This fee is paid by the operator to the city as part of the permit application package, and will
typically be paid subsequently on an annual basis as part of the permit renewal process. This
may also be referred to as an earnest money deposit (EMD).
Permit review fee
This covers staff time for permit review and inspection. Seattle estimates eight hours for each
bikeshare permit review, and requires US$1,672 to cover that time.
Administrative fee
Typically assessed at a per-bike rate (generally US$10-$15 per bike), this fee covers
administrative staff time to manage a dockless bikeshare pilot program. This may also be
referred to as a permit issuance fee.
Performance bond
Once an operator is awarded a permit, the company is required to have a certain amount of
funds accessible to the city to cover potential costs incurred from maintenance, removing and
storing mis-parked bikes, property repair, or in the case of a company not removing its bikes if
its permit is revoked. Performance bonds are typically assessed at a per-bike rate (sometimes
with a cap on the total amount), and the total may need to be increased or decreased prior to
any changes to an operator’s fleet size.
Non-compliance fee
Some cities charge operators a non-compliance fee for violating permit requirements. This
may be a flat fee, as is the case in Dublin (€75), or it may differ depending on the severity of
the violation. Durham, North Carolina charges operators US$50 for each bike that the city
must relocate.
In-lieu fee
An operator has the option to pay an in-lieu fee to the city instead of agreeing to meet a
certain permit standard or requirement. For example, if an operator cannot or chooses not to
maintain a certain percentage of their fleet in all neighborhoods of the city, they might pay an
in-lieu fee, which the city then uses to provide more equitable bikeshare service.
