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A Look at Pricing Strategies: Citi Bike Quietly Increases Annual Membership Prices

  • Nadine Ghiran - SUBTA
  • Jan 5, 2022
  • 4 minute read

Citi Bike — owned and operated by Lyft recently announced it’ll raise its prices at the end of January, giving the subscription industry a case to look at for pricing strategies. 

Starting Jan. 28, New Yorkers who use Citi Bike as a mode of transportation will have to pay $185/year, up from $179/year, for unlimited 45-minute classic bike rides. Time beyond the 45-minute limit will increase to $0.15 per minute, up from $0.12. Non-members will have to pay $3.99 per ride, up from $3.50.

The price increase was done quietly on the company’s website, according to New York Post.

Read on to learn more about Citi Bike’s decision to increase its annual membership, how customers are reacting, and what other subscription brands should do when considering pricing strategies.

Citi Bike’s Reasoning

Finding reliable supply chains and distributors has been a problem for many businesses lately, including Citi Bike.

The increased supply chain costs are ultimately what forced Citi Bike to increase its annual membership fees, a company spokesman told New York Post. 

Additionally, Citi Bike’s pricing strategies will better support its plans for expansion.

The company has grown from 6,000 bikes and just over 300 stations to 25,000 bikes and more than 1,500 stations since launching in 2013, according to Citi Bike’s subtle announcement. It plans to grow its bike inventory to 40,000 by 2023, and the subscription’s pricing strategies will help accomplish that.

New York City Reacts

Customers have mixed feelings about the increased prices. One member commented via a Fishbowl post, “If the bikes are in better shape and the docks are reasonably stocked, I’ll pay the ransom. If it’s the same BS we’ve been dealing with, I don’t know if it’s worth it.”

Likewise, another Citi Bike user told New York Post that, “I just want to get around the city without having to keep paying more. Cycling’s great, but it’s a little less great when it costs more.”

On Twitter, users have responded to Matthew Cheyes, a reporter at Newsday, tweeting the news:

On the other side of the aisle is this more positive comment from the first customer to visit all 1,577 of Citi Bike’s stations:

“Citi Bike transformed NYC living for me, so I don’t mind the increase. Though it’s a reminder their fundamental issue hasn’t changed — entire neighborhoods chronically have no available bikes or docks. I wonder if the ongoing expansions this price hike funds will help with that,” Eric Finkelstein told New York Post.

Citi Bike did not publicly announce the change, only reflecting the updated prices on its website with the brief message, “On January 28, we’re changing our prices to better support growing operations and continued expansion.”

While increasing prices is often necessary for businesses, if done incorrectly, it may leave a negative impression on existing customers and weaken their loyalty.

Subscription Business Pricing Strategies

Supply chain costs are just one reason to increase the prices of your subscription. If your business is in the growth stage, increasing your prices might be necessary if you look to scale or maintain profitability.

Being open and honest with your subscribers needs to be an essential part of all pricing strategies, and oftentimes your customers won’t unsubscribe because of pricing changes.

Economic repercussions from the pandemic, such as inflation, are nothing new. When you’re planning a price increase, sending an advanced notice of a pending raise with a detailed explanation is only confirming what your customers expected — and showing them your loyalty and dedication to transparency.

Some subscriptions operate through grandfathering — letting existing customers retain their current price as they increase it — in order to keep customers satisfied.

For example, Netflix raised its prices in 2020 but allowed existing subscribers to keep their original subscriptions for a limited period. By allowing current members to stay locked in to the price they signed up for, Netflix made the shift easier.

On the other hand, grandfathering has its downside: it could undermine the value of your product, according to Patrick Campbell, CEO of ProfitWell.

Subscriptions should tread carefully when evaluating the options for a price increase.

Citi Bike’s decision to increase its annual membership is not only driven by inflated costs from supply chains but also by Citi Bike’s desire to be more consumer-centric: Its goal is to make more bikes, providing customers with more flexible options.

While the company’s intent was there, it wasn’t communicated clearly. By only releasing a small statement, Citi Bike didn’t capitalize on its potential for positive press — it didn’t emphasize what customers would gain from this price raise. 

Price changes aren’t only crucial to the scaling of a subscription brand, but they also provide added benefits to subscribers. Whether that be more products or free shipping, the advantages must be clearly articulated once the price increase is implemented.

Pricing strategies need to be given a lot of thought before being utilized. Once subscription businesses identify next steps, those changes need to be articulated clearly and the motives behind them. Open and honest communication increases trust, customer loyalty, and customer satisfaction. 

Key Takeaways:

  • Citi Bike quietly raised its annual riding membership from $179/year to $185/year.
  • Customers voiced both positive and negative reactions to the news.
  • Subscriptions need to communicate openly with customers about price changes and their potential benefits.

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