Problem Definition
Ridgeport Bikes is the public bike-share scheme of the City of Ridgeport, a fictional US city of about 650,000 people. The city owns the bikes and stations and pays a private operator to run the system. Ridgeport Bikes has 2,000 bikes (1,200 classic pedal bikes and 800 e-bikes) at 220 stations, and riders took about 1.5 million trips in 2025.
Fares have not changed since 2019. A single ride costs $3.00 for up to 30 minutes, a day pass costs $12, and an annual membership costs $100 with unlimited rides of up to 45 minutes. E-bikes cost the same as classic bikes, even though they now carry about half of all trips and cost far more to operate because batteries must be swapped and charged.
In 2025 the system cost $8.4 million to operate. Sponsorship brought in $1.5 million and fares brought in about $3.4 million, leaving the city to cover a subsidy of about $3.5 million. The city council has voted to cap the subsidy at $3.0 million a year from 2027 and to require a reduced-fare programme for low-income residents, which is expected to cost about $0.25 million a year in lost fares and administration.
The Director of Transportation has asked you: What new fare structure should Ridgeport Bikes adopt to stay within the subsidy cap while protecting ridership and access?
Additional InformationAsk for dataInterviewer’s data
If asked, please share that:
- About 56% of trips are made by annual members and 44% by casual riders (single rides and day passes)
- About half of all trips (about 735,000 of 1.5 million) are on e-bikes, although e-bikes are only 40% of the fleet; day passes are used almost entirely on classic bikes
- The average casual e-bike trip lasts about 16 minutes; the average member e-bike trip lasts about 14 minutes
- The operator estimates that each e-bike trip carries about $1.50 of extra operating cost (battery swaps, charging, heavier maintenance) compared with a classic bike trip
- The sponsorship contract ($1.5M a year) runs until 2029
- There is no reduced-fare programme today
Question 1Structuring
How would you approach designing a new fare structure for Ridgeport Bikes?
Hint · Structuring
Build 3–4 branches that are specific to this client and question, not a generic framework. Check they don't overlap and together cover the problem.
Try it first, then checkCheck my answerModel answer
A strong structure has four branches:
1. Objectives and constraints
- a) Financial: subsidy of $3.0M or less, including the $0.25M reduced-fare programme
- b) Ridership: keep trips as close as possible to 1.5 million
- c) Equity: an affordable option for low-income residents
- d) Simplicity: fares that riders can understand at the station
2. Riders and demand
- a) Segments: annual members, casual single-ride users, day-pass users (often visitors)
- b) Product: classic bike versus e-bike trips
- c) Sensitivity to price in each segment (members are usually less sensitive than casual riders)
3. Costs
- a) Fixed costs (stations, operator contract, insurance)
- b) Variable costs, especially the extra cost of e-bike trips
4. Pricing options and benchmarks
- a) Price levers: single-ride fare, unlock fee, per-minute charges, day pass, annual membership, reduced fare
- b) What peer US systems charge and how their pricing has changed
- c) Revenue, cost and ridership impact of each option against the three objectives
What the interviewer is looking forInterviewer’s viewInterviewer’s view
A good candidate recognises that a public scheme has more than one objective: financial (stay within the cap), ridership (keep people riding) and equity (access for low-income residents). A strong candidate segments riders (members versus casual users, classic versus e-bike) and notes that different segments respond differently to price. An excellent candidate spots, before seeing any numbers, that the flat fare for e-bikes is a mismatch between price and cost.
If the candidate treats this as a pure revenue-maximisation problem, ask: "Is the city trying to make as much money as possible from this system?"
So What? cascade:
- Level 1: the city needs more fare revenue or lower costs
- Level 2: there are three objectives that can conflict (finance, ridership, equity), so the best structure is the one that meets the cap with the smallest loss of riders
- Level 3: price should follow cost. E-bikes are the costly, popular product and are underpriced, which is where fare changes will do the most work
Question 2Numeracy
The city has two fare options on the table. Using Exhibit 1, calculate fare revenue and the city subsidy under the current fares and under each option. Which option meets the $3.0M cap?
Hint · Numeracy
Write the formula before you plug in numbers, keep units and zeros explicit, and sanity-check the order of magnitude at the end.
Exhibit 1Riders, Trips and Prices under Each Fare Option (Annual)
| Segment | Current: volume | Current: price | Option A: volume | Option A: price | Option B: volume | Option B: price |
|---|---|---|---|---|---|---|
| Annual members | 12,000 members | $100 | 11,400 | $125 | 11,800 | $120 |
| Member classic trips | 380,000 | Included | 360,000 | Included | 420,000 | Included |
| Member e-bike trips | 460,000 | Included | 438,000 | Included | 400,000 | $0.20/min x 14 min |
| Casual classic single rides | 225,000 | $3.00 | 205,000 | $3.75 | 230,000 | $3.00 |
| Casual e-bike single rides | 275,000 | $3.00 | 250,000 | $3.75 | 190,000 | $1.00 + $0.35/min x 16 min |
| Day passes sold (about 2.5 trips each) | 60,000 | $12 | 54,000 | $15 | 57,000 | $12 (classic bikes) |
Source: Ridgeport Department of Transportation rider survey and operator data. Volumes under Options A and B are survey-based estimates.
Source: Ridgeport Bikes case file
Additional InformationAsk for dataInterviewer’s data
- Option A: raise every fare by 25%
- Option B: keep classic single rides at $3.00 and the day pass at $12; charge e-bikes by the minute ($1.00 unlock plus $0.35 per minute for casual riders; $0.20 per minute for members); raise the annual membership to $120
- Both options include the new reduced-fare programme (cost $0.25M a year)
- Operating cost stays at $8.4M, except that each e-bike trip avoided saves $1.50
- Sponsorship stays at $1.5M
Try it first, then checkCheck my answerModel answer
Step 1: Current fare revenue
| Segment | Calculation | Revenue |
|---|---|---|
| Memberships | 12,000 x $100 | $1,200,000 |
| Classic single rides | 225,000 x $3.00 | $675,000 |
| E-bike single rides | 275,000 x $3.00 | $825,000 |
| Day passes | 60,000 x $12 | $720,000 |
| Total | $3,420,000 |
Current subsidy: $8.4M - $1.5M - $3.42M = $3.48M (above the $3.0M cap)
Step 2: Option A (+25% on everything)
| Segment | Calculation | Revenue |
|---|---|---|
| Memberships | 11,400 x $125 | $1,425,000 |
| Classic single rides | 205,000 x $3.75 | $768,750 |
| E-bike single rides | 250,000 x $3.75 | $937,500 |
| Day passes | 54,000 x $15 | $810,000 |
| Total | $3,941,250 |
- E-bike trips fall from 735,000 (275,000 + 460,000) to 688,000 (250,000 + 438,000), saving 47,000 x $1.50 = $70,500
- Subsidy: $8.4M - $0.07M - $1.5M - $3.94M + $0.25M = approximately $3.14M, which breaks the cap by about $0.14M
Step 3: Option B (e-bike per-minute pricing)
| Segment | Calculation | Revenue |
|---|---|---|
| Memberships | 11,800 x $120 | $1,416,000 |
| Member e-bike minutes | 400,000 x 14 min x $0.20 = 400,000 x $2.80 | $1,120,000 |
| Classic single rides | 230,000 x $3.00 | $690,000 |
| E-bike single rides | 190,000 x ($1.00 + 16 x $0.35) = 190,000 x $6.60 | $1,254,000 |
| Day passes | 57,000 x $12 | $684,000 |
| Total | $5,164,000 |
- E-bike trips fall from 735,000 to 590,000 (190,000 + 400,000), saving 145,000 x $1.50 = $217,500
- Operating cost: $8.4M - $0.22M = approximately $8.18M
- Subsidy: $8.18M - $1.5M - $5.16M + $0.25M = approximately $1.77M, about $1.2M below the cap
Step 4: Ridership check
| Scenario | Total trips | Change vs. today |
|---|---|---|
| Current | 380,000 + 460,000 + 225,000 + 275,000 + (60,000 x 2.5) = 1,490,000 | |
| Option A | 360,000 + 438,000 + 205,000 + 250,000 + (54,000 x 2.5) = 1,388,000 | -102,000 (-6.8%) |
| Option B | 420,000 + 400,000 + 230,000 + 190,000 + (57,000 x 2.5) = 1,382,500 | -107,500 (-7.2%) |
Answer: only Option B meets the cap. Both options lose about 7% of trips, but Option B raises about $1.2M more in fares than Option A and also lowers operating cost, because it charges for the product that drives cost.
What the interviewer is looking forInterviewer’s viewInterviewer’s view
The candidate should compute revenue line by line, then the subsidy as operating cost minus sponsorship minus fares, plus the reduced-fare programme. The two traps are: (1) forgetting the $0.25M reduced-fare cost, which makes Option A appear to pass; and (2) forgetting that Option B reduces e-bike trips and therefore operating cost.
A strong candidate also compares ridership: both options lose about 7% of trips, but Option B raises far more money for the same loss. If the candidate is slow on the per-minute arithmetic, prompt: "What does an average casual e-bike trip cost under Option B?" ($1.00 + 16 x $0.35 = $6.60).
So What? cascade:
- Level 1: Option A raises about $0.5M; Option B raises about $1.7M
- Level 2: Option A still breaks the cap once the reduced-fare programme is included; Option B meets it with room to spare
- Level 3: for roughly the same loss of riders, charging for the costly product (e-bike minutes) is much more effective than raising every price
Question 3Judgement & Insights
Before the council vote, the Director wants to know how Option B compares with other US systems and what it means for riders. Look at Exhibits 2 and 3. What do you take away, and would you change anything in Option B?
Hint · Judgement & Insights
Read the exhibit title, axes and units first. Lead with the ‘so what’, then back it with one or two numbers.
Exhibit 2Fares at Selected US Bike-Share Systems, 2026
| System | Annual membership | Casual classic ride | Casual e-bike ride | Member e-bike ride | Low-income programme |
|---|---|---|---|---|---|
| Citi Bike (New York City) | approximately $239 | approximately $4.99 for 30 min | approximately $0.41 per min e-bike fee | approximately $0.27 per min | Reduced fare approximately $5 per month; e-bikes approximately $0.14 per min |
| Divvy (Chicago) | approximately $99 for new members ($143 for existing members) | $1 unlock + approximately $0.19 per min | $1 unlock + approximately $0.44 per min | approximately $0.20 per min | Divvy for Everyone: approximately $5 per year |
| Capital Bikeshare (Washington, DC) | $120 (up from $95 in August 2025) | $1 unlock + approximately $0.15 per min | $1 unlock + approximately $0.35 per min | approximately $0.15 per min, no unlock fee | Capital Bikeshare for All: approximately $5 per year with a $40 monthly ride credit |
| Ridgeport Bikes today | $100 | $3.00 for 30 min | $3.00 for 30 min | Included | None |
| Ridgeport Option B | $120 | $3.00 for 30 min | $1 unlock + $0.35 per min | $0.20 per min | To be designed |
Source: published fare pages and 2026 price announcements of Citi Bike, Divvy and Capital Bikeshare. Rounded.
Source: Ridgeport Bikes case file
Exhibit 3US Bike-Share Industry Context
| Indicator | Value |
|---|---|
| Trips on station-based bike share in NACTO member cities, 2025 | approximately 82 million (+6% vs. about 77 million in 2024) |
| Share of North American shared micromobility trips on electric bikes or scooters, 2024 | approximately 66% |
| Increase in annual pass prices since 2019 (reported in 2024) | Chicago about +32%, Boston about +30%, New York about +21% |
| Reasons Citi Bike gave for its 2026 price rise | Tariffs, higher operating, insurance, vehicle and staffing costs |
Source: NACTO (2026, 2024); NABSA 2024 State of the Industry Report (2025); Citi Bike (2026).
Source: Ridgeport Bikes case file
Try it first, then checkCheck my answerModel answer
Takeaways:
- Option B follows the industry. Citi Bike, Divvy and Capital Bikeshare all charge by the minute for e-bikes, at about $0.35-0.44 per minute for casual riders and about $0.15-0.27 for members. Option B's $0.35 and $0.20 sit inside these ranges.
- Ridgeport has been an outlier. Peers raised annual pass prices by about 20-30% after 2019; Ridgeport kept flat fares for seven years while electric vehicles, which now carry about two-thirds of shared micromobility trips in North America, became the main product.
- Membership remains cheap. At $120, Ridgeport would match Capital Bikeshare's new price and still be about half of Citi Bike's approximately $239.
Refinements to Option B (using the approximately $1.2M headroom):
- Cap member e-bike charges per ride (for example at $3.00, similar to the caps some peers use) so heavy e-bike commuters are not penalised
- Design the reduced-fare programme on peer lines: about $5 a year, with discounted e-bike minutes (about $0.10 per minute) or a monthly ride credit
- Consider keeping membership at $100 or $110 to protect the most loyal riders; keeping it at $100 would cost about 11,800 x $20 = $236,000, which fits easily inside the headroom
- Leave some headroom for rising costs, as peers cite tariffs and insurance as ongoing cost pressures
What the interviewer is looking forInterviewer’s viewInterviewer’s view
The candidate should read Exhibit 2 for the pattern, not every number: large US systems charge e-bikes by the minute, keep a cheap way for low-income residents to ride, and have raised annual prices. Option B is in line with peers on e-bike pricing, and $120 a year is still well below Citi Bike. Exhibit 3 shows that Ridgeport's fare freeze since 2019 is unusual and that e-bikes are now the core product nationwide.
A strong candidate notices that Option B more than doubles the cost of a casual e-bike ride ($3.00 to $6.60) and adds about $95 a year for an average member who rides e-bikes (400,000 trips / 11,800 members = about 34 trips x $2.80). An excellent candidate uses the $1.2M headroom to soften those effects rather than keeping it as surplus: a public scheme does not need to beat the cap by $1.2M.
So What? cascade:
- Level 1: Option B looks like what peers do
- Level 2: the design is sound, but the increases for casual e-bike riders and e-bike-heavy members are steep
- Level 3: the headroom below the cap should buy back ridership and equity, for example with a per-ride cap, a generous low-income programme, or a smaller membership increase
Question 4Synthesis
The Director has two minutes before the council meeting. What is your recommendation?
Hint · Synthesis
Answer first: the recommendation, two or three reasons with numbers, then risks and next steps.
Try it first, then checkCheck my answerModel answer
Recommendation: adopt a refined Option B: charge for e-bike minutes, keep classic rides at $3.00, and use part of the savings to protect members and low-income riders.
Why:
- It meets the cap. Option B raises fare revenue from about $3.4M to about $5.2M and cuts operating cost by about $0.2M, bringing the subsidy to about $1.8M, well within the $3.0M cap. Option A (+25% on everything) still breaks the cap at about $3.1M.
- It costs no more riders than the alternative. Both options lose about 7% of trips, but Option B loses them mainly from short e-bike trips that cost $1.50 each to serve.
- It matches peers. Per-minute e-bike pricing, a membership far below Citi Bike's, and a $5-a-year low-income plan mirror Chicago, Washington DC and New York.
Refinements: a per-ride cap on member e-bike charges; a reduced-fare plan at about $5 a year with discounted e-bike minutes; membership at $100-110 instead of $120; keep the remaining headroom as a buffer against cost increases.
Risks and mitigations:
- Ridership falls more than the survey predicts: review monthly trip data for six months and adjust the per-minute rate if casual e-bike trips drop by more than 35%
- Equity backlash: launch the reduced-fare programme on the same day as the new fares, with sign-up through existing city benefit programmes
- Complexity at the station: show the price of a typical 15-minute trip on the app and at every station
What the interviewer is looking forInterviewer’s viewInterviewer’s view
Look for an answer-first recommendation that addresses all three objectives (finance, ridership, equity), cites the key numbers, and names risks and a way to monitor them. A strong candidate recommends a refined Option B rather than Option B as written.
So What? cascade:
- Level 1: adopt Option B
- Level 2: Option B works because it prices e-bikes, the product that drives both demand and cost
- Level 3: the council should see the fare change as a trade: higher e-bike prices pay for a real low-income programme and keep the system within its cap
Data Sources
Ridgeport and Ridgeport Bikes are fictional; all system-level figures for Ridgeport are invented. Industry and peer facts come from the public sources below; figures are rounded for interview math.
- Citi Bike annual membership approximately $239 (from January 28, 2026); single ride approximately $4.99 for 30 minutes; e-bike approximately $0.27 per minute for members and $0.41 per minute for non-members in NYC; reduced fare approximately $5 per month with e-bikes at approximately $0.14 per minute; price rise attributed to tariffs, operating, insurance, vehicle and staffing costs -> Citi Bike (Lyft), "New Citi Bike prices begin in January", 2026, https://citibikenyc.com/pricechange2026
- Divvy annual membership approximately $99 for new members and $143.90 for existing members; single ride $1 unlock + approximately $0.19 per minute classic, approximately $0.44 per minute e-bike; member e-bike approximately $0.20 per minute; Divvy for Everyone approximately $5 per year -> Divvy (Lyft) and City of Chicago, "New Divvy pricing" and 2026 membership announcement, 2026, https://divvybikes.com/pricing and https://www.chicago.gov/city/en/depts/mayor/press_room/press_releases/2026/march/divvy-bike-expansion.html
- Capital Bikeshare annual membership $120 (up from $95); single trip $1 unlock + approximately $0.15 per minute classic, approximately $0.35 per minute e-bike; members approximately $0.15 per minute e-bike with no unlock fee; Capital Bikeshare for All approximately $5 per year with a $40 monthly ride credit -> Capital Bikeshare (Lyft), "New Capital Bikeshare pricing begins on August 1, 2025" and pricing pages, 2025, https://capitalbikeshare.com/blog/2025priceupdate
- Approximately 82 million station-based bike-share trips in NACTO member cities in 2025, +6% from approximately 77 million in 2024 -> NACTO, "Shared Micromobility in NACTO Member Agencies: 2025 Trends", 2026, https://nacto.org/publication/shared-micromobility-in-nacto-member-agencies-2025-trends/
- Approximately 66% of North American shared micromobility trips were on electric devices in 2024 -> North American Bikeshare & Scootershare Association (NABSA), "2024 State of the Industry Report", 2025, https://nabsa.net/2025/08/07/2024industryreport/
- Annual pass prices up about 32% in Chicago, 30% in Boston and 21% in New York City since 2019 -> NACTO, "Shared Micromobility Report: 2023", 2024, https://nacto.org/publication/shared-micromobility-report-2023/
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