You’ve likely heard of car sharing and have an understanding of what it is, but perhaps we can fill you in on some details. A lot of people mistake car sharing for car rentals, which is not wrong, but also not exact. Car sharing is a type of car rentals, but unlike rental customers, sharing customers usually “rent” their cars for short periods. Secondly, customers don’t go to rental businesses to get their cars. Instead, car-share vehicles are typically available at different stations spread out over a city or a larger area.
Many believe that shared mobility is the future of transportation since it can reduce transportation costs and pollution. The circumstances must line up for car sharing to reach its full potential, but it seems very promising. With increasing population numbers in large urban areas, vehicle density starts to grow drastically. The number of vehicles on the road in some large cities is already affecting travel times and pollution. This situation is forcing people to search for alternative means of transportation.
Even though car sharing is still quite a young idea, its development is starting to pick up the pace. We witness vehicle sharing implementations in many large cities across Europe and the United States, and its reach is already spreading out towards smaller municipalities. When we add electric vehicles into the mix, shared mobility becomes an even better and less costly option of transport.
How Does Car Sharing Work?
For a customer to use car sharing, some initial registration and sign up usually has to occur. The identification process differs between companies due to different market strategies or legal requirements from country to country. Most commonly, customers register via a mobile app, which they use continuously for mobility sharing services. Or sometimes, they receive a membership card (RFID), which they use to interact with sharing stations. Once a customer registers as a user, he begins using the company’s services based on the company’s service plan and pricing setup.
Regarding pricing, it varies from company to company, but some basic patterns emerge. Plenty of car sharing companies charge their customers a monthly fee and additional charges for each ride. The amount of the monthly fee usually impacts the price of the service. For example, a customer paying 20€ per month for his subscription pays 20c per kilometer driven. A customer paying 30€ per month, on the other hand, pays only 15c per kilometer driven. These pricing options are usually designed to fit the needs of customers and allow them to choose the best plan. A lot of e-mobility providers also offer prepaid options, where customers top up their account balances with funds, which they later use to pay for using the service. Read more about payment types in our article Payment Type Variety to Increase Customer Satisfaction.
It is difficult to give a general pricing example of how much car sharing costs the customer because the prices vary depending on several different factors. Some providers have electric vehicles, which cost less to fill up than regular cars. On the other hand, some providers only charge for distance, while others have time-related fees as well.
Why Is It Considered the Next Step in Transportation?
We have established that car sharing is still new to the World. At the moment, it is still leaning towards fulfilling the needs of regular customers. Customers considered regular follow the most basic transportation patterns. Such patterns include driving to work for short to medium distances and taking short trips to the mall or across the city. Regular customers’ lifestyles result in very short travel distances when compared to people who “live on the road.” The availability of shared mobility options is still an issue since no one wants to wait for their ride. The increasing trend, however, should resolve this over time. Current data suggests that carsharing is, in fact, a less costly option for regular customers than buying a new car.
We should also not overlook the environmental facts. Highly populated cities all over the world have issues with logistics and pollution. What mostly causes these issues is each citizen traveling alone in his vehicle. Due to this fact, some cities already began introducing policies where cars can not enter the city center unless they are full or have a minimum number of passengers. Through this policy, cities try to get people to carpool and promote ride-sharing, reducing pollution and traffic jams.
Research suggests that each shared car can replace about ten vehicles in terms of green mobility. Secondly, shared cars are usually new models with advanced safety systems and compliance with emission regulations or run on electricity. If we factor this in the equation, shared mobility certainly seems like the way to go.
Is It Like Airbnb for Cars?
Well, that is an excellent observation, since plenty of car sharing providers also offer booking of available vehicles. Bookings mean if customers plan ahead, they can improve car availability. Furthermore, reservations are only one of the many features popping up among different providers. Different legal restrictions and infrastructure result in various types of vehicle sharing.
Some providers choose to charge the customer for time and distance, while others only for time or only for distance. Secondly, some providers take a straightforward Car2Go approach, where customers find an empty vehicle, hop in, and use it for a ride to the other side of the city. In contrast, other providers choose a more rental-based approach, where customers rent the car for medium periods, like the weekend, and use it for longer trips.
We’ve also come across cases where customers can get even more involved. For example, peer to peer car rental allows customers to put their cars up for sharing whenever they are not using them. Also, some providers offer ride-sharing or carpooling as a part of their services, where multiple customers going to the same location can share a ride.
Difficulties for Car Sharing Companies
Most companies offering e-mobility services have their solutions developed in-house. They use these solutions for managing customers, calculating usage rates, collecting payments, and other rating and billing related services. While we’ve established that there are many different pricing options available, when we take a step back and look at more cases, they all begin to look the same. Whether it is pricing by kilometers, hours, days, or even a combination of them all, this is still a very monotonous pricing design.
Sure, it is somewhat useful to keep things simple, but what happens when a provider wants to upgrade his pricing design? Pricing upgrades become a requirement due to competitor pricing, and to offer the best deal to the customers. Significant updates are the point where in-house developed solutions, unless truly versatile, begin to lack the ability to support the requirements.
Billing and rating service providers have their solutions set up to offer versatile capabilities from the very start. Professional architecture results in billing and rating solutions which do not have to be customized but are highly configurable. Be it car sharing, or any other industry, configurability options are incredibly handy when trying to support a new pricing design. Arguably, it might be cheaper to develop a rating solution in-house, but over time it usually turns out that it was not the right choice.
Tridens Can Help
Here at Tridens, we have developed our all-round solution for rating, billing, and payment collection. The Tridens Monetization offers extensive configurable features when setting up a pricing design.
Our solution allows providers to spice up their pricing model with additional rating options, such as:
- Pickup or drop-off location affecting rates
- City-zone (industrial, center, suburban) applying different discounts or rates
- Free kilometer or free duration resources for users to spend
- Partner service integration with loyalty awards for users
- Custom tariff setup – daily, nightly, weekends, etc.
- Tiered prices based on current kilometers or total bill due
- Prepaid, postpaid and pay-as-you-go options
- Targeted Discounting
- Group hierarchy setup for sponsorship (Company-employee)
- Payment responsibility for families or companies
- Payment collection (Paypal, Authorize.Net, Braintree, Stripe, Cybersource, Wirecard)
One of the most exciting features Tridens Monetization has to offer is the ability to create your rates based on several different factors and combinations among them. Customers driving in different city areas at different times of day could have different prices in addition to kilometers or duration. Secondly, tiered pricing can also boost your sales for customers generating a lot of usage. We worked on a use-case with Zeev, a company from Portugal, where their car-rental customers would pay different fees based on their current accumulated kilometers. Tridens Monetization also supports real-time notifications, real-time rating, thresholds, and credit limits. These features allow our clients to set up pricing models with minimum and maximum fees per ride, similar to Uber or Lyft fare fees.
If you are a car sharing provider, or generally interested in Tridens Monetization, and would like to hear how we could improve your current solution, contact us, and our engineers will gladly prepare you a demo and discuss your use-case.