Operational Research, psychology and bus fares
Tina and I use the bus service of Devon to travel several times a month, sometimes when we shop in the city centre, sometimes when we want a walk and the bus is a convenient means of transport. In the UK, there is a concessionary bus travel scheme, so that we have free passes on most bus services after 9:30am on weekdays and at any time at weekends.
We were waiting for a bus in Somerset (county town Taunton) earlier this week, when we noticed an advert for the local service "go anywhere" tickets. And we were fascinated by the prices charged. Clearly, somebody had done some calculations about how to encourage bus use by making the offers attractive. Behind the figures are some models and some adroit psychology. So, here are the figures.
Go anywhere for one day: Adult £10, Child £5, Family (2 adults and as many children as the parents want to look after) £20
To interpret these a little more, no return bus fare in Somerset can exceed £7.50, even if the journey needs changes of bus service. Within Taunton, return fares on one bus service cost £3 maximum. And one needs to know that the bus services radiate outwards from Taunton
Go anywhere for one week: Adult £15, Child £7.50, Family £30
Go anywhere for one month: Adult £55, Child £27.50
So a go anywhere ticket for one day has been priced at less than the maximum of two return journeys. It is likely to appeal to someone starting in Taunton who needs to make two or more journeys out of the county town, or to someone who likes bus rides. The appeal to the holidaymaker or shopper is small; such a customer will probably only make one return trip per day ... but the price may encourage the faint-hearted to take the bus and save on fuel for a car and car-parking charges
But a go anywhere ticket for a week has been priced to encourage commuters and holidaymakers to use the buses. Commuters (five days per week or less) within Taunton will not get an advantage, but those from outside will do so. Holidaymakers and shoppers will be able to use the bus service on two or more days and benefit (even more if fuel and car park charges are considered), and the family ticket has been priced to treat all sizes of family equally.
The clientele for the go anywhere monthly ticket is likely to be regular users of the service, so the price has been set to give a small discount over the price of four weeks' weekly tickets. Holidaymakers don't stay for four weeks.
How does the bus company benefit? Once the bus timetable and route has been set, income from passengers is mostly marginal income. The cost of running an empty bus from A to B is a little less than running a full one, so the company benefits from every ticket sold. So it is in their interest to maximise the number of passengers, and offering incentives such as the weekly ticket, and (less so) the daily and monthly tickets, will increase the number of customers.
I have identified three customer types: commuters, shoppers and holidaymakers and they have different behaviour and needs, and hence the psychology of charges will differ for them. I wonder if there were three models (even mental models) or more? However many, I salute "the buses of Somerset" for their work, their financial O.R. and their psychology.
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| This is not the sort of bus that we use, in Devon or anywhere else. |
Go anywhere for one day: Adult £10, Child £5, Family (2 adults and as many children as the parents want to look after) £20
To interpret these a little more, no return bus fare in Somerset can exceed £7.50, even if the journey needs changes of bus service. Within Taunton, return fares on one bus service cost £3 maximum. And one needs to know that the bus services radiate outwards from Taunton
Go anywhere for one week: Adult £15, Child £7.50, Family £30
Go anywhere for one month: Adult £55, Child £27.50
So a go anywhere ticket for one day has been priced at less than the maximum of two return journeys. It is likely to appeal to someone starting in Taunton who needs to make two or more journeys out of the county town, or to someone who likes bus rides. The appeal to the holidaymaker or shopper is small; such a customer will probably only make one return trip per day ... but the price may encourage the faint-hearted to take the bus and save on fuel for a car and car-parking charges
But a go anywhere ticket for a week has been priced to encourage commuters and holidaymakers to use the buses. Commuters (five days per week or less) within Taunton will not get an advantage, but those from outside will do so. Holidaymakers and shoppers will be able to use the bus service on two or more days and benefit (even more if fuel and car park charges are considered), and the family ticket has been priced to treat all sizes of family equally.
The clientele for the go anywhere monthly ticket is likely to be regular users of the service, so the price has been set to give a small discount over the price of four weeks' weekly tickets. Holidaymakers don't stay for four weeks.
How does the bus company benefit? Once the bus timetable and route has been set, income from passengers is mostly marginal income. The cost of running an empty bus from A to B is a little less than running a full one, so the company benefits from every ticket sold. So it is in their interest to maximise the number of passengers, and offering incentives such as the weekly ticket, and (less so) the daily and monthly tickets, will increase the number of customers.
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| Nor is this a local bus in Devon or Somerset |
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