Indiana University Bike Rental Program Business Plan

As a part of the current Indiana University Student Association administration’s agenda, we have been charged with the task of organizing and implementing a bike rental program for the IU Bloomington campus. The goal of the program is to decrease the number of cars on campus and to decrease the overall carbon emissions created by the students and faculty. Promoting initiatives such as a bike rental program will help IU stay on the cutting edge of sustainability while complementing the newly created Office of Sustainability. This plan needs the support of university divisions, such as the Office of Sustainability, in addition to possible off campus support from local bicycle shops to run as efficiently and safely as possible. This proposal aims to recognize possible implementation methods and the costs and logistics of what we hope to place on campus. The specifics of the initiative are very tentative and flexible, but the following proposal represents our best suggestions for Bloomington.

The Indiana University Plan
Implementation at Indiana University could take a number of different forms. Depending on the availability of funding and interest in the program, IU could have anywhere from 50-200 bikes serving both the university and the city. What we recommend is a well-distributed system of ten stations and 100 bikes placed throughout campus and downtown Bloomington. We are currently working with the university and City of Bloomington officials to determine optimal locations and logistics. We are also in the process of organizing a survey to accurately gauge demand for the program, location and usage preferences, and initial and additional charge amounts. Below is the strategy we have developed for the day-to-day operations of the system.

Technology The most important feature of the programs we are recommending is the technology. The bikes come equipped with GPS, so theft is not an issue, and the stations have built-in RFID sensors, enabling a person to check availability of the bikes at any station in Bloomington. All of this information is fed to the website, which can either be managed by people on campus or the company providing the bikes. The more cost-effective and flexible option is controlling the website in Bloomington. This allows the operator to lock the system at any time, find misplaced bicycles immediately, and respond to technical problems quickly. Signing Up In order to sign up for the program, the user would fill out an application on-line. This application contains the user’s credit card information and a liability waiver. The credit card will be charged an initial fee (see ‘Initial Revenues’ table) and will be held and charged if the user has a bike out over a predetermined period of time (see ‘Additional Charges’ table). The user, having filled out the application, will be mailed their membership card, which they will swipe each time they check out a bike. Once they check the bike back into a station, they will swipe their card again, and the website will update to show that a new bike has become available.

Availability A major concern of any public bike system is safety. However, keeping the bikes available to the students and citizens planning to use them also remains a high priority. Ensuring user safety is a priority of ours, and we have spoken to a number of different offices within the university about whether or not to lock the bikes down at night or during inclement weather. After our discussions, we believe that around-the-clock availability will provide the greatest benefit to the members. The students will have signed a liability waiver, assuming responsibility for their personal safety and welfare while using the bikes. We assume that students and citizens of Bloomington will act in their best interest when deciding what conditions are too dangerous for them. Maintenance The bikes in both of the programs outlined below are constructed of durable materials designed to resist extreme wear and tear. However, repairs may be necessary. In the instance of a damaged bike, there will be a number for users to call a number to alert maintenance of the problem. We intend on having maintenance staff patrolling station to station to ensure that there are no damaged bikes and that all bikes have been put away properly. These workers could be employees of the university or the City of Bloomington. We have discussed the idea with both parties, and potential slots exist provided external funding (generated from the bike system) is available to compensate them for their time. Repairs could be handled by these hired workers or outsourced to a local bike shop. We show preference toward utilizing local bike shops, which, in addition to having the professional expertise required, already have significant credibility within the community. Also, each system has a repair kit that can be ordered for fast and simple repairs.

Depending on the number of stations and the potential for off campus locations, we have outlined several sites near high-traffic areas that would best serve the user groups. These are only tentative and could be changed or altered as we move along in the process. Again, our current plan calls for ten stations, but all of the following are possibilities. Possible On Campus Locations -7th and Woodlawn -10th and Fee Lane -Kirkwood and Indiana -Forest and University (in front of Ballantine Hall) -3rd and Jordan -North Jordan -Fee Lane near 17th (Briscoe Quadrangle) -Stadium Possible Off Campus Locations -9th and College (Smallwood Plaza) -8th and Morton (City Hall) -7th and Walnut (public parking garage) -Kirkwood and Grant (Monroe County Public Library) -3rd and Morton (Convention Center) -4th and Walnut (public parking garage) -3rd and Walnut (site of future Bloomington Transit Station)

Cost Structure Options
Below is a table showing initial charge possibilities and revenues generated under a various number of members. The optimal goal is to reach $160,000, as that is the annual charge for the Public Bike System, our preferred program. There are a number of demand points and price targets that will help reach this goal. Our plan, which applies a flat membership fee initially, allows two free hours once the bike is checked out and charges a fee per hour beyond that. The average class is between 50-75 minutes, so this should allow adequate time to check out and return the bikes properly without charge. The fee charged beyond the two hours will be small, as the goal of the program is not revenue generation. Estimations for the fee range from $1-$3 per hour beyond the two initial hours.

Initial Revenues Number of Users
Membership Cost per Year Revenue - Baseline Membership Cost per Year Revenue - Baseline Membership Cost per Year Revenue - Baseline Membership Cost per Year Revenue - Baseline Membership Cost per Year Revenue - Baseline $10 $20

$10,000 $20,000 $30 $30,000 $40 $40,000 $50

$20,000 $40,000 $60,000

$30,000 $60,000




$100,000 $200,000 $300,000 $400,000 $500,000

$80,000 $100,000 $160,000

$90,000 $120,000 $150,000 $240,000

$80,000 $120,000 $160,000 $200,000 $320,000

$50,000 $100,000 $150,000 $200,000 $250,000 $400,000

Additional Possible Charges
Number of Users
Charge per Hour Over Two Hours Total Average # Hours Over $1 5 Hours 6 Hours 7 Hours 8 Hours 9 Hours 10 Hours $2 5 Hours 6 Hours 7 Hours 8 Hours 9 Hours 10 Hours $3 5 Hours 6 Hours 7 Hours 8 Hours 9 Hours 10 Hours

$5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000 $15,000 $18,000 $21,000 $24,000 $27,000 $30,000

$10,000 $12,000 $14,000 $16,000 $18,000 $20,000 $20,000 $24,000 $28,000 $32,000 $36,000 $40,000 $30,000 $36,000 $42,000 $48,000 $54,000 $60,000

$15,000 $18,000 $21,000 $24,000 $27,000 $30,000 $30,000 $36,000 $42,000 $48,000 $54,000 $60,000

$20,000 $24,000 $28,000 $32,000 $36,000 $40,000

$25,000 $30,000 $35,000 $40,000 $45,000 $50,000

$40,000 $48,000 $56,000 $64,000 $72,000 $80,000 $80,000 $96,000 $112,000 $128,000 $144,000 $160,000 $120,000 $144,000 $168,000 $192,000 $216,000 $240,000

$50,000 $60,000 $70,000 $80,000 $90,000 $100,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 $150,000 $180,000 $210,000 $240,000 $270,000 $300,000

Charge per Hour Over Two Hours Total Average # Hours Over

$40,000 $50,000 $48,000 $60,000 $56,000 $70,000 $64,000 $80,000 $72,000 $90,000 $80,000 $100,000

Charge per Hour Over Two Hours Total Average # Hours Over

$45,000 $60,000 $75,000 $54,000 $72,000 $90,000 $63,000 $84,000 $105,000 $72,000 $96,000 $120,000 $81,000 $108,000 $135,000 $90,000 $120,000 $150,000

Current Proposals
Below are brief summaries of the two programs that we are considering, both of which have similar design and implementation. While EcoTrip offers bike customization and a webmaster to run the website, The Public Bike System demonstrates the flexibility to choose in-house or outsourced bike repair and website management. We favor Option 2, the Public Bike System, for its low cost, high level of customization, lack of infrastructure for installation, and portability.

Option 1 - EcoTrip

EcoTrip is currently operated at several universities of different scales. Though it is the more costly option, it is customizable and has more technologically sophisticated capabilities. It has had success at UC Irvine, where EcoTrip has plans to build its largest setup yet. If put into action, our cream and crimson bikes will be detailed with IU graphics. EcoTrip believes that a system of 100 bikes could see ridership of over 1,000 every day.

Features of the Station 1. Automatically locks and releases bike share bicycles 2. Interprets a university ID card, membership card, or credit card 3. Allows users to select a specific bike 4. Tracks users of bikes and reads the presence or absence of bikes 5. Accepts bikes from any other stations in the bike share network 6. Communicates wirelessly through WIFI or cellular technology 7. Sends user an email or text message receipt of release and return 8. Stainless steel and polycarbonate materials 9. Modular design for easy expansion or relocation 10. Available in single and double-sided layouts Features of the Software 1. Tracks all stations and bikes in real time 2. Identifies and connects user to a specific bike checked out

3. Holds user accountable for bike’s return 4. Charges user based on a customizable time-charge model 5. Integrates with websites such as Google Maps to provide real time bike availability 6. Sends users email or text message receipts for release and return of bike 7. Sends users warnings and messages informing of late returns or penalties 8. Communicates centrally with all stations in the bike share network 9. Communicates wirelessly through WIFI or cellular technology 10. Defines valid users and import user records 11. Creates reports such as: total releases and returns per day, per station; average length of rental per time frame; overdue bike status; current station status; etc. Features of the Bikes 1. Unisex frame 2. Single-speed, three-speed, or seven-speed internal Shimano hub 3. On-board lock suitable for quick daytime stops 4. Adjustable and theft-resistant saddle 5. Front and rear brakes 6. Kevlar tires, double wall rims, and thorn resistant tubes 7. Basket for cargo 8. Highly durable, theft-resistant, and corrosion-resistant components 9. Tracking chip to uniquely identify each bike 10. Space for custom branding, graphics, colors, and customer service information Costs Initial Startup Costs (includes everything from stations to website): $3,500 - $4,000 per bike Operational Costs: $500 - $1,000 per bike per year Recommended Cost Recovery Method: charge an annual membership fee which buys three hours of use daily; charge per hour beyond that; program at UC Irvine also funded by parking violations For a system of 100 bikes, this would require start-up costs of $350,000 - $400,000, and yearly maintenance costs of $50,000 - $100,000.

Option 2 – The Public Bike System

Called “Bixi”, the Public Bike System of Montreal has been regarded as a world leading bike sharing program, ranking 19th in Time magazine’s ‘Best Inventions of 2008.’ It also received both the Edison and Bronze IDEA awards. The system does not require any external energy source, excavation or anchoring platforms, or installation of electrical cables. The system includes bikes, technical platforms, bike docks, pay stations, and proprietary software that runs the entire system. It can be dropped in any location and set up just as easily. The two benefits of this program are that it is entirely solar-powered and that it uses RFID communication. Therefore, the system’s impact on the environment is minimal while maintaining its accessibility for students.

The Bikes 1. Aluminum frames that are light, strong, and durable 2. One-piece handlebars cover and protect all components 3. All cables are covered for better protection 4. Derailleur integrated into axle 5. Chain protector integrated into bike structure -protects chain, prevents riders’ clothes from getting caught in chain, and increases structural integrity of entire frame 6. Active lighting which means front and back lights are always on 7. Front and rear internal brakes for greater safety 8. Adjustable seat positioning 9. Highly durable tires 10. Low center of gravity for greater stability 11. Suitable for a wide range of riders

The Platform 1. Base and electronic hub for bike dock and pay station 2. “Drop and Go” platform is completely portable, infinitely expandable 3. Uniform module means plug and play 4. Easy to install, maintain, and remove 5. No construction or excavation means it won’t damage the locations where they’re placed 6. Anti-skid tires 7. RFID wireless real-time connection 8. Standard modular bike dock unit means it is easy to repair or replace 9. Solar panels power the entire station Costs Initial Cost Outlay – Bixi has a program with which colleges can get a system if they promise twenty members per bike at $80 per year for five years. For every twenty additional members, Bixi will provide another bike. For a system of 100 bikes, we would need to guarantee 2,000 members per year, resulting in revenues of $160,000 per year for five years.

Case Studies
Many campuses across the country have successfully implemented bike-sharing programs. These programs allow students to rent a bike from one station, ride it, and then drop it off to any other station. St. Xavier University and University of California-Irvine are two examples of electronic bike sharing systems on university campuses. St. Xavier University – Chicago, Illinois Modeled after programs in Europe, the system as St. Xavier University in Chicago, Illinois allows users to go to a station and rent a bike either by using an identification card or receiving a code via text message. The program is available to both students and faculty, and users of the program have access to the bikes 24 hours a day, seven days a week. The program at St. Xavier University has around 65 bikes. To help prevent vandalism, the bikes are equipped with unique parts that are difficult to remove. Equipped with computer chips, campus officials can easily locate the bikes. One St. Xavier University official was quoted in The New York Times saying, “You can’t throw [the bike] into Lake Michigan because we’ll know if you throw it into Lake Michigan.” The first fifteen minutes of a bike rental are free. It is then sixty cents for every additional fifteen minutes or $2.40 an hour. In an effort to be environmentally conscious, the stations are powered by solar panels. Initial costs totaled $250,000 and monthly costs are around $3,000. University of California-Irvine – Irvine, California Named ZotWheels, the bicycle sharing program at UC Irvine, is also electronically operated. Users can go online and check the availability of bikes at any of the campus’s four electronic bicycle ports. A main server has software that electronically releases and returns each bike, recognizes users, and tracks each bike in the system. Users receive notifications telling them how long they have had the bike and remind them when to return the bike. A confirmation message is sent to the user to signify the end of their rental upon the return of their bicycle. The program is not funded through private means. It is completely funded and maintained by the Parking and Transportation Department at UC Irvine. Members have to pay $40.00 annually to use the bike sharing system. If a bike is not returned on time or is lost, members must pay a $200.00 fine. To ensure the program was successful, UC Irvine partnered with two other parties. Central Specialties Ltd. was responsible for creating the software that can track and handle the bicycles. Collegiate Bicycle Company (EcoTrip) is a bicycle design and consulting company that helped UC Irvine handle some of the bike sharing program’s operational issues.

We have made significant progress toward putting a bike rental program on IU Bloomington’s campus. Many universities have made the step toward sustainability by placing similar programs on their campuses and in their towns. Biking is a healthy and ecologically responsible alternative to driving cars around Bloomington. The proposal outlined contains what we believe to be the best system for Indiana University. With the understanding that there are several parties involved and that this endeavor will require a great amount of effort, we are enthusiastic about the progress we have made so far and the receptiveness of everyone we have contacted. Please feel free to contact Ben Schulte ( (513-460-7742) with any questions you may have regarding this proposal.