Profit and utility optimization through joint dynamic pricing and vehicle relocation in carsharing operations

Pricing is one of the main determinants of a successful carsharing business plan. Companies develop different pricing strategies to increase attractiveness, profit, and service usage. Using dynamic pricing strategies can lead to service improvement in terms of profit and better customer satisfaction. This paper presents a novel research contribution to the field of transportation policy by introducing a new framework for designing dynamic pricing strategies in carsharing operations. We develop two hybrid-pricing strategies to increase profit and user utility in car sharing and analyze the service key performance indicators. These two different hybrid-pricing strategies are based upon two different approaches: one relying on demand related information (i.e., fixed price and time-based dynamic price) and one relying on supply related characteristics (i.e., maximum profit price and availability-based dynamic price). By considering both user utility and company indicators, this model features a bi-level structure that allows for rapid implementation. The framework relies on real-world data, typically available to carsharing companies, including membership data, geographic distribution of users, fleet composition, and the location of vehicles and stations. Additionally, we propose a relocation procedure that relocates vehicles on a day-to-day adjustment process. We study the impact of these strategies in an agent-based environment capable to accurately replicate a real carsharing service that operated in the city of Munich, Germany. Once these policies are in place, results show how it is possible to increase profit and customers’ utility. Moreover, we show how an increment in profit corresponds to a reduction of the utility and vice versa. Overall, the effectiveness of the proposed hybrid-pricing strategies in improving key performance indicators such as profit and score in carsharing services is demonstrated through the positive impact of demand-based pricing combined with relocation operations, while supply-based pricing strategies were found to be ineffective in enhancing profit and booking time.