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<h2 class="hd hd-2 unit-title">3.3.1 Profit, costs, and revenue</h2>
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<p>In this unit, you will hear from Prof. Christo Venter from the University of Pretoria in South Africa, who will highlight the costs, revenues, and methods of financing often practiced in the transportation sector.</p>
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<h3 class="hd hd-2">Christo Venter, Ph.D. (University of Pretoria, South Africa)</h3>
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<h2 class="hd hd-2 unit-title">3.3.2 Overheads, assets, and operations</h2>
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<p>As Prof. Venter just mentioned, there are high-wage countries and low-wage countries. Each country has different regulations. Are you familiar with regulations and minimum pay for your own country? You can learn more about the concept of minimum wage/pay in the US context <a href="https://www.dol.gov/general/topic/wages/minimumwage" target="[object Object]">here. </a></p>
<p>Please share your findings about wages in your country in the discussion linked below.</p>
<p>Even policies and strategies for school buses vary around the world. Check out this <a href="https://www.businessinsider.com/school-buses-around-the-world-2018-5#in-japan-some-school-buses-are-modeled-after-beloved-cartoon-characters-children-at-an-osaka-kindergarten-ride-to-school-inside-a-giant-pikachu-other-bus-characters-include-thomas-the-tank-engine-and-hello-kitty-12" target="[object Object]">article </a>via Business Insider to see how different school buses are from country to country. You may want to research the useful life of a bus in your own country or city (meaning how long the bus is expected to work until it needs to be replaced).</p>
<p>NOTE 1: The life span of a bus plays a role in calculating transport costs. The same concept applies to new mobility modes.</p>
<p>NOTE 2: Prof. Venter will mention "Module 5" a few times during these lecture videos. He is referring to concepts we look forward to covering later in the course, during Week 5!</p>
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<p>In the case of <strong>new mobility</strong>, substantially higher overhead costs are allocated to manage <strong>stakeholder interactions</strong>. This is one of the main differences between new and traditional transportation services.</p>
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<p>What solutions does new mobility bring to the peak dilemma?</p>
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<h2 class="hd hd-2 unit-title">3.3.3 Revenue</h2>
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<p>In the last unit, we learned about transport costs. Can you recall what they are?</p>
<p>In the next few videos, you will learn about how to generate revenue, and thus how to make transportation business models profitable.</p>
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<h3 class="hd hd-2">Revenue - Part 1</h3>
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<p>As Prof. Venter just mentioned, new mobility helps to overcome some of the constraints imposed on mobility by the 'traditional' transportation system through:</p>
<p>- peer-to-peer sharing</p>
<p>- improved utilization of vehicles</p>
<p>- improved routing</p>
<p>- sharing of rides</p>
<p>- improved pricing mechanisms</p>
<p>One thing, however, remains particularly difficult. Companies lack information about how valuable each trip is, which challenges its individual pricing. Can you recall a similar concept from the land use module? In the context of housing, the individual bid-rent curve is shaped by what each person values. The same goes for one's willingness to pay for travel. Values like privacy, travel time, comfort, or the importance of a trip all factor into our willingness to pay.</p>
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<h3 class="hd hd-2">Revenue - Part 2</h3>
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<p>A definition to remember:</p>
<p><strong>Economies of scale</strong> - Cost reductions that occur when companies are able to increase production and/or frequency of services without significant increase in their fixed costs (like administration, office space, and vehicles).</p>
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<h3 class="hd hd-2">Revenue - Part 3</h3>
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<p>What are some key business advantages of new mobility compared to traditional transportation companies?</p>
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