Saturday, September 20, 2008

The Two Unbundling Dimensions

Over this summer I commuted everyday on BART. On Mondays I bought a ticket worth 5 round trip to my destination at exactly five times the price of 10 one way trips. Bay Area Rapid Transit (BART), says this in its web page about its tickets,
BART tickets are like debit cards with stored value. All BART stations have automatic ticket vending machines that accept nickels, dimes, quarters and $1 coins, as well as $1 $5, $10 and $20 bills. BART fares are set with a mileage-based formula, therefore time-based passes (e.g., weekly or monthly) are not available. [you can buy ] A 6.25% discount in two denominations: $48 ticket for $45; $64 ticket for $60
So every time you take a trip you pay for the mileage. Even with the high value ticket the amount is deducted for every trip. The only discount you get is probably due to their lower transaction cost and breakage (depending on you to not use all the amount). By not offering a unlimited travel pass and charging every trip based on mileage, BART has unbundled its offering. This is more like usage based pricing, where you pay per use.

This leads me to define that unbundling can happen along two dimensions, along product or along usage.  BART ticket unbundling is not like the airline baggage fee in which the unbundled product/services are distinct. The airline baggage fee is along product dimension and BART pricing is  along the usage dimension. 

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