You Should Rent your Bike, Here's Why
Why should I rent my bike?
In today’s world, we have a robust sharing economy built for entrepreneurs to make money. You have digital platforms that reduce downside risk and enable you to share everything from your house to your car, so why not share your bike?
Lower cost and higher rental rate
Bikes are lower cost to purchase and have a high daily rental rate. When you compare the three business models, home sharing, car sharing, and bike sharing, the economics behind bike sharing make a lot of sense. Marketplaces are constantly changing the % of margin they take so for the sake of simplicity below, we will assume that hosts get 100% of their rental price. In each example, you will see that a high-end bike gets 100% paid back after less than 60 days of rentals, compared to cars at ~2 years and homes ~5 years.
Advantages
From a business perspective, bikes have a competitive advantage over homes and cars because they are:
- Easier to store
- Less expensive to buy
- Less expensive to maintain
Easier to store
As an example, cars need designated parking areas that can be quite expensive, especially in urban areas. On the other hand, bikes are much smaller and you can store several bikes in the spot of one car's garage space.
Less expensive to buy
Cars and houses require a large amount of initial investments and on top of that it involves a vigorous purchase process. A pre-owned carbon fiber mountain bike costs around $3,000. This amount is less than 1% of the cost of a house and ~10% of the cost of a car.
Less expensive to maintain
While bikes do have a maintenance aspect, it is much lower than that of a car or house. Homes for example have several expensive maintenance items that bikes and cars do not have such as roofs, water heaters, and landscaping. Cars however have similar wear items to bikes such as tires and brakes but replacing the tires and brake pads/rotors of a bike typically costs around 30% of what it would for a car, which is a substantially lower cost.
Deep Dive - Car vs Bike
Below we’ll examine two specific examples from the San Francisco Bay Area comparing a well-known car-sharing marketplace and Upcycle, bike sharing marketplace.
Car Rental Example
Attached is a classic example from a car-sharing platform in the San Francisco Bay Area which shows a 2-year-old Tesla Model 3. According to Kelly Blue Book a 2 year old Long Range Tesla Model 3 with 40k miles is worth between $34-40k in a private party sale and is renting for $56/day. A daily ROI of 0.15%
Bike Rental Example
Another is an example from Upcycle, our peer to peer bike sharing platform in the San Francisco Bay area that shows a 2019 Santa Cruz Blur CC X01 Reserve (4-year-old bike), worth only ~$2600 according to Bicycle Blue Book and is renting for $50/day. A daily ROI of 2% or 13x of the Model 3 on Turo.
*Prices are estimates as seen on each platform August 2023