Pricing segmentation for ride-sharing platform

Challenge

The challenge was to simulate a ride-sharing platform for private car owners, which only has a mediating function as a place to "get together" — the car owners who offer shared rides are private, as well as the people who look for a ride.

Three different scenarios had to be tested to understand customer satisfaction, user growth, and the possibility for users to move to a competing platform:

1. An initial situation (without fee)
2. A situation where the platform charges a fixed fee at a fixed time
3. A situation where the fee is introduced sequentially for different regional segments

Previous empirical research showed that price segmentation was the best long-term solution for the platform to succeed in Germany, and the simulation was a tool to confirm that.

Solution

A simulation was built using a Discrete-Events model in AnyLogic, taking advantage of the GIS integration to improve visibility. Segmentations were made by region.

Three scenarios were tested and the results needed to show a comparison between the platform and the competing platform, also showing the users who use both. The fixed price and segmented price scenarios were simulated and compared.

Outcome

The hypothesis that segmented price would lead to better customer satisfaction and more significant user growth over time was confirmed by the simulation. This is an example where simulations can be used as a second measurement tool to prove a point with additional arguments.

Project Features

• Industry: Applications
• Model: Discrete Events & GIS
• Duration: 1 month