Do pay-what-you-want pricing strategies really work?

[timelesstable]

Do pay-what-you-want pricing strategies really work?

I know all of this is so far directed at other lines of business but I wonder if it could be applied to Public Transport.

www.bbc.co.uk/news/uk-england-33609867

[dwarfer1979]

Jul 25, 2015 21:22:33 GMT 1 timelesstable said:

Do pay-what-you-want pricing strategies really work?

I know all of this is so far directed at other lines of business but I wonder if it could be applied to Public Transport.

www.bbc.co.uk/news/uk-england-33609867

As a short-term promotional tool, particularly if linked to a post-promotion campaign about the real cost of provision (passengers paid x but it cost us y to provide), maybe but as a long term revenue strategy I would say not really. The principal problem is that there is a high and relatively fixed basic cost of supply and a long-term regulatory requirement to provide service (and to have a certain level of funding etc to remain in operation) so as an operator you need to have some certainty over long term income to plan (also one of the big issues over concessionary fares is that uncertainty and lack of control over income from a major passenger groups - and given concessionary fares are driven by average fares for the operator such a scheme would not work with the current payment structures).

The added problem is that people have a very strangely warped view of the value of the service being provided which is often inverse to the delivery on the ground, in a recent passenger satisfaction survey Leicester got half the satisfaction for value for money that Surrey got despite having fares almost half the price with a better & more frequent network with newer & better buses and the other 'soft' satisfaction metrics (such as customer service & driver friendliness being comparable). People in Surrey think they are being undercharged for a more expensive service whilst people in Leicestershire think they are being overcharged for a cheaper one (it is more expensive to provide a service in Surrey than Leicestershire so the price should be higher there) when if anything Leicestershire residents are probably the ones being undercharged due to the greater competition in the area (particularly the City of Leicester).