The Driver is probably the easiest Rideshare participant to analyze, because he or she benefits financially by offsetting the cost of the commute.
In a major city like Los Angeles, most corporate commuters have a couple hundred people working in the same building as them, and a couple thousand people working on the same block as them. That means that there is great potential to offer a ride to someone with a minimal amount of detouring for the driver.
Minimal does not mean none, of course. The Driver must make a detour in the outer suburbs of Los Angeles to pick up his passenger, which may take anywhere from five to ten minutes of time and require the expenditure of perhaps one-tenth of a gallon of gasoline. Similar expenditures are also required at the end of the day to drop the passenger off. Then there is also the compensation the Driver will expect for surrendering the privacy and serenity of driving alone to pick up his passenger. The latter is obviously somewhat more difficult to put a money value on than the former. But research by Rideshare management and outside experts has shown that in many cases the Driver will be satisfied with as little as $5 compensation for each leg of the trip per passenger. So the value the Driver places on each of the “cost” components of his operation may look something like this:
Gasoline $4.00/gallon $0.40
Time $24.00/hour $2.00
Privacy Value $2.60
The Gas price reflects the current average in Los Angeles as of November 9th, 2011, and the time value reflects the median income of American workers divided by the average number of hours they work. So long as the Driver receives at least $10 of compensation per round trip, he is satisfied. In this example we have assumed that the Driver goes ten minutes out of his way to pick up the passenger on the residential end, but need only make minimal detours on the business end of the trip(i.e. they work in the same building or at least on the same block.) If the Driver had to go out of his way on both ends, the compensation he demanded would probably go up.
That is the Driver. Next we will turn to the Passenger.
In a major city like Los Angeles, most corporate commuters have a couple hundred people working in the same building as them, and a couple thousand people working on the same block as them. That means that there is great potential to offer a ride to someone with a minimal amount of detouring for the driver.
Minimal does not mean none, of course. The Driver must make a detour in the outer suburbs of Los Angeles to pick up his passenger, which may take anywhere from five to ten minutes of time and require the expenditure of perhaps one-tenth of a gallon of gasoline. Similar expenditures are also required at the end of the day to drop the passenger off. Then there is also the compensation the Driver will expect for surrendering the privacy and serenity of driving alone to pick up his passenger. The latter is obviously somewhat more difficult to put a money value on than the former. But research by Rideshare management and outside experts has shown that in many cases the Driver will be satisfied with as little as $5 compensation for each leg of the trip per passenger. So the value the Driver places on each of the “cost” components of his operation may look something like this:
Gasoline $4.00/gallon $0.40
Time $24.00/hour $2.00
Privacy Value $2.60
The Gas price reflects the current average in Los Angeles as of November 9th, 2011, and the time value reflects the median income of American workers divided by the average number of hours they work. So long as the Driver receives at least $10 of compensation per round trip, he is satisfied. In this example we have assumed that the Driver goes ten minutes out of his way to pick up the passenger on the residential end, but need only make minimal detours on the business end of the trip(i.e. they work in the same building or at least on the same block.) If the Driver had to go out of his way on both ends, the compensation he demanded would probably go up.
That is the Driver. Next we will turn to the Passenger.
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