Report: MBTA fare hikes won’t affect ridership

Posted 8/24/12

BOSTON – The MBTA price increase is unlikely to affect ridership, according to an analysis by Price Intelligently, a Boston-based start-up, published on Friday.

Using its price optimization software, the company ran a pricing study on the Massachusetts Bay Transportation Authority and found that the fare hike was well within the acceptable range of Bostonians’ willingness to pay, according to the Pricing Intelligently blog post, co-written by Kaitlyn Sestak and CEO Patrick Campbell.

The software’s pricing algorithm determined that the optimal price range for a one-way subway ticket is between $1.46 and $2.76, though Pricing Intelligently predicted “wide scale revolution won’t happen until the upper $3 mark.”

One possible reason Charlie Card holders were so upset when the MBTA raised the price of a one-way subway ride $2 from $1.70 in July, was because “the communication and execution of the price change was absolutely dreadful,” according to the post.

The blog post ends with lessons businesses should learn from the MBTA debacle about proper price communication.

“Value perception within your pricing is key,” said the post’s authors. “Never simply raise the price without a thorough and transparent explanation.”

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