Monday, March 13, 2006

Price Inelasticity


General marketing principles would suggest that you discount customers who buy in larger volumes. This is in order to encourage people to spend more and to reflect the lower operating costs of processing one large order than many smaller orders.

Unfortunately, Metro North Railroad hasn't fully embraced this concept and through a little careful planning, commuters can arbitrage some posted fares.

Monthly passes are the best value (especially if bought online for a 2% discount). Daily peak fares are the most expensive (especially if bought on board with a surcharge).

The opportunity for a commuter is with the 10 trip ticket.

Let's use Fairfield as an example (see above pic from Metro North's website). Single adult peak station ticket = $14.25. Ten trip peak ticket $142.50 (no discount). Single adult off-peak station ticket = $10.75. Ten trip off-peak ticket $91.50 (has discount). Metro North's policy if you have an off-peak ticket is to step you up to peak fares if you do it onboard the train. In this case, $3.50 a ticket.

You see where this is going... if you don't need a monthly, and travel regularly during peak hours, buy the 10-trip off-peak ticket ($91.50), pay the $3.50 step up fare each time ($35.00) and net saving 11% over the 10-trip peak ticket.


Anonymous Ben said...

If only this were true. Metro North will step up your discounted fare on an off peak 10-trip to a full fare one way. So, the step-up from an off peak 10-trip is more money than the step-up from a one way off-peak. The only time you save any money is when the conductor mistakenly charges the lower step up...maybe 1 time out of 10.

4:27 PM, April 11, 2006  
Blogger New Haven Line Commuter said...

Ben - you are correct

I stand corrected. Emailed Metro North and they said policy was to step up at a rate that will in fact make a ten trip off-peak more expensive if used during peak hours

Now that's some terrific marketing by the railroad

11:10 PM, April 12, 2006  
Blogger SaxTeacher said...

And as I found out today, the ten trip ticket is an even worse deal. It "expires" one year from the date of purchase, after which it has NO VALUE, regardless of how many unused fares remain on it.

I found this hard to believe, as I have a memory of returning unused or perhaps partially-used ten-trip tickets to an MNRR customer service office in the Graybar building years ago.

A phone call to MNRR's customer service line reached a person who said that expired tickets can be exchanged for new ones "at any ticket window." However when I tried this at GCT today the ticket window personnel told me that expired tickets have no value at all (!).

I don't go in all that often (a few times a year) but always bought ten-trip tickets for the discount. Now my ten-trip peak (with 4 rides left on it) and my ten-trip off-peak (with 6 rides left on it) are both valueless... which means I've just donated over $100 to MNRR ! @#$%.

7:31 PM, February 05, 2010  
Blogger Jim S said...

Could someone tell me the cost of a monthly and daily Metro North Commutation in 1985 - any station will do.

Jim S

4:10 AM, April 01, 2010  

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