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We at Boris bikesgoodwheelrentabike.co.uk can hardly be described as competitors to the 8,000 bike strong Boris bike scheme.

It would hardly be a like-for-like comparison anyway, for a whole host of reasons not least because Barclays Bank has never offered us tens of millions of pounds to have their name embalzoned on our bikes.

In fact, it is not just the bank that have been called upon to dig deep to advertise on the bikes and thereby keep the scheme afloat – it is also local councils. As the scheme expends southwards towards Hammersmith and East to Canary Wharf, local councils have found that they have been called upon to find the funds with which to cover the cost of these expansions.

In short, the scheme does not have and never did have a viable business model, which begs the question: if renting out bikes is apparently such a loss-making endeavour why would any sane person get into a business like that?

To answer that, one must first come to grips with the curious model upon which shared scheme bike rentals are based. Therein lies the scheme’s biggest strength and also its one big fatal flaw – the pricing structure.

The model is based on the first half an hour being free. Yes, we all know that it isn’t really ‘free’ after all it does in fact cost £2 a day access fee for non-members (up from £1 last year) but even with the doubling of the access fee it is still quite cheap for short periods, which is a great thing. So on that count, well done Boris bikes!

But the other side of the coin is not so ‘well done’ in that it intentionally discourages longer rentals using the ‘carrot and stick strategy’. It doesn’t want you holding onto a bike for too long a period when someone else could be using it so it makes it prohibitively expensive to do so.

Hence, keep the bike for over 3 hours in a single stretch and the price (including access fee) rockets to £37!

By comparison at www.goodwheelrentabike.co.uk that kind of money would get you the use of a bike for a whole day with £7 left over for a Starbucks coffee and large muffin (just a suggestion of course, you could instead give us a tip if you preferred to do that!)

So by rewarding you if you dock the bike within half an hour and punishing you severely if you hold onto it for more than a few hours they created a situation where only 1% of users keep the bike longer than 1 hour at a time. (This information is based on ‘Barclays Cycle Hire customer satisfaction and usage – wave 2, 2 September 2011’).

The big minds behind the scheme had originally anticipated a win-win situation. The carrot and stick would encourage the majority of people to return the bikes quickly but the minority who didn’t would fund the scheme with the onerous charges applied to their accounts.

But things didn’t quite work out that way (they never do work out quite as anticipated – after all that is life). They found that they had become too successful for their own good. They had locked themselves into a model that was a losing one. There was never going to be enough money coming in from rentals to cover the cost of their overheads because their customers knew better than to allow themselves to be ‘punished’.

Were we to imitate their business model our sanity would well be in doubt. In fact our business model is based on a very opposite model. Rather than increasing our prices the longer you rent from us we reduce our prices the longer the rental period. So while a one-day rental is £30 a two-day rental is just £48 and a three-day rental is just £60.

Compare that with the £52 cost of renting a Boris bike for more than 6 hours and you will see that the models work very differently. We encourage long-term rentals, we make it cheaper the longer you rent and we have a business model that actually works.

So no, Boris bikes will never be in competition with us or us with them.

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