Lime, formerly called LimeBikes, is a San Francisco-founded ridesharing platform that was created out of the idea that conventional boundaries shouldn’t limit people from renting a car. It has a mobile app that allows you to find, unlock, and rent an electric scooter, bicycle, or regular pedaling bicycle nearby and you can use them anywhere they’re available.
As Lime launches in new markets, there is one question on everyone’s minds: How does Lime make a profit? This post will break down its company model and explain how Lime makes a profit. We’ll analyze whether Lime is a profitable venture and whether it can sustain itself with its current model.
Lime offers a service where users can pay a one-time price to unlock an e-scooter or e-bicycle. Users then receive a code that allows them to access the vehicle for up to 30 minutes each day. The service costs $5/month for e-scooters and $10/month for e-bikes. These prices include unlimited usage.
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Business Model of Lime
Like Uber and Airbnb, Lime invests in the shared mobility space. However, rather than taxis and hotel rentals, Lime offers bicycles, electric scooters, and e-bicycles. The business model of Lime is relatively simple, so we’ll break it down.
Product/Service
Getting around on a university campus or major city can present various challenges. While most students utilize their own vehicles or public transportation, both methods have significant drawbacks. For drivers, parking is often difficult, particularly if lots or garages are costly. Public transportation requires tickets, and stations may not be convenient.
With Lime, you don’t need to walk everywhere. You can use an electric bicycle or scooter instead. Or if you prefer to travel by foot, they offer non-electric bicycles for rent.
To use these cars, drivers must follow these steps:
- Riders download an app and then use it to pay for their rides.
- When users want to get a ride, the mobile application shows them all available scooters and bicycles nearby. They can then select one, pay $1 to unlock it, and start riding for as long as they wish. Bikes and electric scooters each cost $5 per hour, so riders must pay before they begin riding. Riders can also choose to pay extra for an additional half-hour if they wish.
- After finishing their ride, they unlock the bike using the app.
To make its products available to more people, Lime works with local governments to provide free scooters. Otherwise, the scooters might become a bothersome problem, and not one that local governments would be willing to pay to fix regularly.
Lime doesn’t just maintain its own app; it maintains the bike and scooter fleets too. It also has ancillary services for things like maintenance and repair.
Lime hires people called Lime Juicers who go out at night to harvest the fruits and vegetables and then bring them back to the office where they’re charged overnight. The charging part is broken down into two parts: Harvest and Service.
A Juicer will collect scooters and bikes from people who want to sell their old ones and bring them to a charger. It then scans the QR codes for each scooter or bicycle before bringing it to recharge.
When the device is fully charged, the Juicer starts the servicing stage. At this point, the Juicer drops off the devices at designated locations. Then, it scans the codes again to ensure they’re where they belong.
Lime also pays bike riders to fix their own bikes and scooters if there are any issues. Users report the issues and the locations where the bikes and scooters were left and the company sends its own employees to collect them.
Customers
If Lime is offering a valuable service, then who is actually riding its micro-mobility products (e-bikes)? In Lime’s annual report for 2020, it offered some insights into the average user.
Here are some highlights:
- A third of Lime’s users got to their jobs using the app.
- On average, Lime riders are 38 years old, with a quarter of them being 46 or older.
- About one in five rides help riders connect to a transit stop, such as a bus terminal, subway entrance, etc.
- 70% of users have decreased their use of car services, taxi services, and ride-sharing applications due to Lime.
It appears that most of the demand for these bikes comes from people who don’t own cars but would rather not deal with them either.
If you live in a major city like Seattle or San Francisco, then Lime is a much more efficient way to get around than walking or taking public transportation. Also, electric scooters and bike rentals are better for the environment than driving alone.
Costs
While Lime is popular among consumers, it has a lot of overhead. The main cost for the business includes:
- Replacement Model Acquisitions – Replacing older and broken vehicles with newer ones.
- Fleet maintenance – The company keeps its fleet running by paying for repairs and keeping them well maintained.
- Insurance – Lime takes some responsibility for what happens to its customers’ phones.
- Contract Cities – The city agrees to pay the university for the right to operate its campus there.
- Marketing and customer service – With so many different countries, Lime needs a lot of full-time employees to run things efficiently.
Let’s go through these costs one by one.
How Does Lime Make Money?
Ride Fees
Lime only makes profits from its users. Thus, the more active users within the application, the more cash the business can make. However, the application is totally free to download and set up. Individuals just pay whenever they ride a motorbike or electric bicycle.
At the start of 2021, Lime operated in 135 locations across 30 countries. By the last quarter of the year, 55 million rides had taken place, surpassing 200 million rides for the entire year. In 2020, an average ride was 12.5 min and covered 1.3 mi, both higher than before COVID-19.
Since Lime makes more revenue when people ride longer distances, they charge more for each mile traveled. They charge $1 to unlock an e-bike or scooter, then 0.15 cents per mile after that.
With an estimated average time of 13 minutes, Lime expects to earn approximately $2.95 per rider per ride. However, in 2020, scooters have used an average of four times per rider per ride, which would bring the total earnings to $13.28.
With that number of scooter rentals, Lime expects to earn $6,640 every single day in Seattle alone.
Subscription Fees
Lime also offers a premium service called Lime Prime. This service costs $5.99 a month and waives the unlocking fee for riders in certain areas. However, some cities do not charge an unlocking fee, so if you live in one of those locations, you can get a 50% discount on your rides.
Aside from subscription and per-ride payments, Lime doesn’t have any other sources of revenue.
Lime Funding, Valuation, and Revenue
It took a lot of time before Lime became profitable. Even though the company had proven that there was a significant market for self-driving vehicles, it was difficult to make money from them.
The first roadblock to success was the fact there was already a competitor called Bird who launched their service before Lime. Bird scooters and bicycles were actually first to market, so Lime faced an uphill battle. The startup was founded in 2017, but its first financing rounds raised $50 million from investors in 2018.
A total of $1.5 billion has been invested into LimeBike since its inception in 2015. In July of 2017, the second round of investment valued the company at $1.3 billion. In January of 2018, the third round of investment valued the startup at $2.4 billion. And by February of 2019, the firm was worth $2.9 billion.
Once the COVID-19 pandemic hit, Lime’s share price dipped significantly. As a consequence, the company had to cut staff numbers and reduce its operations in 12 countries. In May of 2020 Lime raised $170 million in its 5th round of funding. But its value plummeted to $510 million, down from $1.4 billion in 2019.
Is Lime Profitable?
San Francisco-based micro-mobility startup Lime is profitable, showing that its model for dockless bicycle sharing is sound. This is a big deal for a company that began as an epicycle rental service but has since expanded to include electric scooters, electric pedal cycles, and more.
According to recent reports, Lime is expected to turn a small but profitable net income next year. Despite the challenges of the past few years, the company has been making progress and finished the year strongly.
By the end of 2019, Lime had become profitable and even started generating positive free operating income (FOI). Given how much money they lost during their early days, this news was pretty exciting.
That said, profitability means different things to different people, and Lime doesn’t seem to be losing any sleep over its new financial situation. It’s not clear whether the company provided exact figures, but it appears that the future looks much brighter than it did last year.
To get an idea of how profitable Lime is, let’s take a look at some numbers from last year. They might not be entirely accurate, but they give us some insights into how profitable the company is.
Let’s first take a quick glance at the money Lime earns from each individual scooter.
On average, one scooter earns $13.28 per day.
Now, we’re going to look at the costs involved.
- It costs $1.72 per charge for charging.
- On average, each ride costs $0.51 to repair and maintain.
- $0.41 per credit/debit transaction fee
- $0.06 per ride for customer service
- $0.05 for insurance
For every ride, there is a cost of 2.75 dollars. If you take longer rides, then you may be able to make more, but you’ll also pay more for things like repairs, maintenance, and so on.
It may seem unlikely for Lime to be making any money at all, but the truth is that they’re actually doing quite well. And the reason for that is that the average life span of a Lime scooter is just under 30 days. As a result, the company has to buy new scooters every time one breaks down, which means that they’re constantly incurring operating expenses.
By 2020, Lime unveiled the new Gen4 scooters in Paris, which are even more rugged and maintenance-free than the previous version. One way they did this was by installing replaceable lithium-ion (Li-ion) battery packs instead of nickel metal hydride (NiMH) ones.
As long as Lime is making money, it stands to reason they will turn a real financial gain soon.
If they want to be successful, they need to charge more for each call than Skype charges. They don’t have any competition, but they could potentially get some new clients by increasing their prices.
Conclusion: What makes Lime different from other companies?
Lime has created a mobile app called LimeBike which allows people to rent bikes by the hour. It’s a cool idea, but they need some help making it happen.
LimeBike does not just save people from using their cars or other modes of transport, but it can also be good for our overall wellbeing and the environment too.
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