The economic reasoning behind Cruizador
A while ago, we published an article in which we unraveled 6 myths and realities around peer-to-peer motorcycle rental (here).
To continue our reasoning, we will, in this article, look purely and simply at the economic reasoning behind Cruizador which pleads in favour of renting out a motorcycle. And since often a few numbers tell more than 1000 words, let’s take a concrete example. economic reasoning behind Cruizador
Here’s what to remember for our busy readers (summary)
What our case study says. With each effective rental on Cruizador:
- you cover 100% of the variable costs (this is normal, you do not lose money when you rent out) and;
- you pay off part of the fixed costs;
- And from 13 rental days over the entire season, not only will you have covered 100% of the fixed costs and your motorcycle will no longer cost you anything;
- But in addition, beyond this threshold of 13 rental days, each additional rental day brings you a net income!
So your motorcycle will earn you money, which you can use to buy accessories or save for the purchase of your next bike.
And cherry on top of the cake, there are no registration fees and your bike is insured by Cruizador for each rental (comprehensive cover)!!
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economic reasoning behind Cruizador
Now in details, here is the complete business case
I am a 30-year-old motorcyclist, living in Lausanne, and I own a big size engine motorcycle (>1000 cc). Take for example a 2019 BMW R-Nine-T. Note that some of these costs are indicative. Indeed, many parameters should be considered, for example for the calculation of insurance (age of the rider, nationality, etc.). However, they will give you an order of magnitude.
How much does a bike cost yearly?
First there are the fixed costs. Note that I have to pay these fees, regardless of the number of km I travel with my bike.
- Insurance (comprehensive cover) : around 600CHF/year;
- State tax (VD): 329 CHF/year;
- Highway sticker: 40 CHF/year;
To this will be added the variable costs, which correspond to the wear and tear costs and thus depend on the number of km traveled. Let’s count around 4,000 km traveled per year, which is already in the upper range for this type of bike. We will count:
- A service: around 500 CHF/year;
- A set of tires: around 400 CHF/year;
Add up all these costs (fixed and variable), and divide by the number of km driven, and you will come up with a depreciation cost of around 0.4 CHF/km. This is an estimate. The price of the services may change a bit depending on the dealership, as can the price of tires, the state tax which changes depending on the cantons, etc.
Now that we’ve established the depreciation cost, let’s take a look at how much I can make per rental day on Cruizador.com. I set a daily rental price at 150CHF with a km-allowance of 200km/day.
|BMW R-Nine T|
|Daily rental price||
|Depreciation (per km)||
|Nb of km traveled per day||
You will notice that I cash in 25CHF per rental day, which represents a profitability of 17%!! Which is not too bad these days. In addition, for each rental day, I offset part of my fixed costs (insurance, tax, etc.).
In addition, Cruizador offers you possibilities to optimize my rentals, eg.:
- By setting up a different rental price during the week and the week-end;
- By charging each add. Km pro rata (exceeding the km-allowance).
Calculating the break-even
Now multiply these results by 5 rental days over the season, then by 10 days, etc. and you will see that the results become more and more financially interesting. And from a certain number of days (which will depend on the type of motorcycle, the rental price, etc.), your motorcycle will even start to generate you additional income.
If we continue the reasoning one step further, and calculate the break-even point (i.e. from how many rental days, you will have offset all your costs), you will see on the graph below that from 13 rentals your motorcycle generates a net income!!
So, some will argue that the purchase of the motorcycle is not included in the calculation. This is true, but we purposely did not include it. Because regardless of whether or not it is rented on Cruizador, you own already the motorcycle. This is not about buying a motorbike and renting it out on Cruizador, but about offsetting the ownership costs.
Then, and as mentioned in our first article (why rent a motorcycle), the question of resale will sooner or later arise. And with an already saturated second-hand market, particularly for certain models (eg Yamaha MT-07), dealers who are increasingly making commercial gestures to try to compensate for the drop in sales, and buyers who are more and more picky, the risk of losing money is real. Also, if you have already cashed in the rentals, then even if you lose a little money on the resale, it won’t be too bad.
In conclusion, and at the risk of repeating ourselves, this is just one example. But with :
- a relatively short season in Switzerland (due to the weather);
- irreducible fixed costs;
- households with increasingly limited income, etc .;
Isn’t Cruizador a real solution to indulge in an expensive passion, without having to make too much sacrifice to be able to afford it?
And for all the others, for whom the purchase of a motorbike does not come into question, because they only do a few rides out per year, Cruizador allows you to rent a motorbike according to your desires/needs or to test ride different models, in just a few clicks, from your smartphone or computer, from the largest online catalog in Switzerland. Isn’t that beautiful?!?
Ride on !
economic reasoning behind Cruizador