Getting the Cheapest Ride

I’m trying to decide what to do about train travel during our 5-month sabbatical in Germany.

For $55 I can buy a card that gives me a 25 percent discount on all train tickets I buy. So if I buy $220 worth of train tickets I break even — any more than that is a good deal.

I have to trade off this fixed cost against the savings in the face of uncertainty about how many tickets I’ll be buying and the likelihood that much of my train travel expenses will in any case be reimbursed by universities that invite me to lecture.

These are considerations that confront people every time they have the possibility of paying a fixed fee for the option of a lower price on some set of goods or services. Rationally we should make this calculation very carefully, as our simple economic theory suggests.

In my case, however, I just don’t want to be bothered with worrying about it, so I’m going to buy the train card and know that henceforth I’ll be getting the cheaper price. But — I’m not so interested in saving money that I’m willing to buy the more expensive train card that gives me a 50 percent discount!


heidi

Another option of traveling for less in Germany is to use the extensive offers of shared ride agencies like "Mitfahrzentrale" or "Mitfahrgelegenheit" (also online: add .de), something that has been well established for decades in Germany and is very popular among the budget-conscious.
It works that people who have free seats in their cars on trips offer them via a service for a small fee, usually a percentage of the cost of gas. This way you would not only save a lot more money than by train, but it also offers the chance to meet locals and sometimes to get more quickly to remote areas.
If the online option seems unsafe to the American eye (which it is not) In large cities there are offices, usually close to the major train stations, where you can register to offer rides or to find rides.

For budget train travel, and if time is of not an issue, I recommend the weekend-ticket ("Schoenes Wochenende Ticket") for EUR 35, which allows up to 5 people to ride regional and local trains together anywhere on one day of the weekend. Often those five people only find each other at the train station, next to the ticket machine ;-)

Both options are very popular in Germany, and I personally have both used extensively. Most tourists and visitors just don't know about this option.

Read more...

Jeffrey

Costco, Sam's Club, BJ's. This decision kills me annually.

Ami in Deutschland

Another option for the money-saving and adventurous economist: travel together with strangers to receive a discount on "Buddy" travel. For travelers booking together, the second person only pays half of the original price, regardless of whether either one has a Bahncard. If one person has a Bahncard, they also get a discount. Just ask the people waiting in line at the ticket office with you if they are headed to your destination. I used this strategy to get to Berlin on a fast train for less than the cost of a normal slow trip and ended up having a nice conversation with my "buddy".

You could, of course, extend this strategy and travel on regional trains with group tickets (and random strangers), thereby extending your network of German associates. And you won't have to put up any money for a Bahncard.

Chris

Another specialty of the german train system: If you book some time in advance (normally 2 weeks are enough) you can save up to 50% of the price. With the 25% discount card you can save another 25% on the discounted price. With the 50% discount card you cannot. Therefore you get a cheaper ride with the 25% card if you can plan your trips and book in advance.

JL

So once again an illustration that economic thought, while good for releasing intellectual dopamine, has little impact on how people actually make decisions outside the ivory tower.

frankenduf

this contradicts a subsequent post that economists are fascinating

A E Pfeiffer

If you tell yourself that the money you spend on the discount card is a sunk cost, then you can be happy in the knowledge that you're only paying 75% of the face value of each ticket you buy.

a man with bad knees.

Reminds me of my skiing days when I would buy a season pass. Instead of trying to amortize its cost over the number of times I skied or calculate a break-even day, I simply said it cost me $500 to ski the first day and was free thereafter.

Cosi

My University solved the uncertainty for me: they only reimburse the discounted ticket. Therefore, my decision whether to buy the discount card is only unaffected by the overall number of train tickets I foresee to purchase, irrespective of whether they will be refunded or not by the University. If the University were to reimburse based on the full price, so that I could pocket the difference, I would buy the discount if the amount stolen to the University is higher than or equal to the cost of the discount, irrespective of the number of planned personal trips (the amount I can steal, in turn, depends on the nu,ber of reimbursed trips).
I would never steal money from the University because I have an institutional commitment, but less committed people would find it profitable to do it, and would certainly do it, so this reimbursement policy is well-designed to useful.

Sebastian

Daniel,

Keep buying the train tickets ahead of time and the price will even drop further.
The train system in Germany is great, but pricing is so confusing especially when you travel in rural areas, where you'll find 10 different machines for different trains, subways, buses and you don't know if you have to buy them and punch the ticket or just enter the bus, b/c the ticket is fine like that. :)

Goodness...I miss my German (engineerd) country, but certainly not when it comes to buying train tickets.

Sebastian

Rick

One imagines that the operators of the transit system have done the math and designed their discount card's price around maximizing it's value. Absent good knowledge about my own future usage, I would think of it in the same way as a warranty or a gift card.

Personally, I prefer not to lock myself in to the need to "make good" on a bet I've made on my future actions. I find I've often discounted the externalities which may affect my ability or willingness to take the repeated action necessary to gain back my investment.

Unless I can commit to the profitable action ahead of time, I'd rather retain fiscal flexibility.

Rich Wilson

You are essentially buying insurance against the eventuality that you will spend over X in train tickets.

Keep in mind that the seller of the card has all kinds of data concerning 'average usage' and is in a much better position to set prices than you are.

As Jess points out, part of the equation for them will be how much more will you use the train if you have the card.

Flado

Keep in mind that it is pretty easy to spend US$ 220 on train tickets in Germany. For example, a ticket from Stuttgart to München and back (about 200 km) is EUR 100 (~ US$ 150). So if you plan on making at least two weekend trips of similar length, you'd be well advised to take the BahnCard 25. And if you will be coming soon, there's an even better offer: you can get the Fan BahnCard 25 online for EUR 19 (it expires on June 30, unless the German football team wins at least one match at the UEFA Euro 2008 - in which case it will be prolonged by one month for each win).
http://www.bahn.de/p/view/preise/bahncard/fanbahncard.shtml

This said, BahnCard 25 will not give you rebates on city transit - which, I guess, will be the transportation you will need most. BahnCard 50 will, but I don't know how you can claim them. Also, with the BahnCard 50 any of your children/grandchildren can travel with you for free (which might be relevant).

For (near-)city transit (S-Bahn, U-Bahn, busses, trams) you should look into daily passes. The conditions vary from city to city, but for Stuttgart for example a simple return ticket may cost more than a daily pass for the whole regional network.

Hope that helps.
Flado

Read more...

Marco

The 50% discount card ("Bahncard 50") has a reduced price for certain groups, including people older than 60. I don't know if you apply, but the reduced price is 110 EUR, which means you'll have the same break even point of 220 EUR and save more after that.

If you would go today, then you might consider the "Fan Bahncard 25", another 25% discount card, for 19 EUR which is valid until the end of June, but automatically extends by one month for each game won by the german team during the upcoming euro championship.

Also, try to make yourself acquainted with their online store (English version: http://www.bahn.de/international/view/en/index.shtml). Booking in one or two weeks in advance through their website often allows "super saving prices" which aren't available on the ticket counter. Long distance conncetions , bought in advance, are often sold with an considerable rebate (like Hamburg-Munic for 29Euro). If you can get your bargains out of pre-planning, you might not need a discount card at all.

The online store btw. accepts credit card payment and you can *print* out your actual ticket from you computer, which is great, because you'll be safe from the pleasure to meet a german ticket clerk.

Read more...

Jess

My boyfriend and I recently returned from a weekend trip to Amsterdam, where a card was available for purchase that offered a bus pass plus free admission to a number of museums and discounted rates at certain restaurants, for a fixed period of time.

Once we bought the card (it was 43 euros each for two days), it felt at times as though the race was on to break even. At the end of the trip we looked at our receipts to figure out how much we'd saved - it came to around 55 euros apiece, so 12 euros over and above what we would have spent had we done all of the same things at full price, without the card. But then again, we probably wouldn't have done all the same things without the card - mainly, we ate only in restaurants that offered a discount with the card, most of which were nicer than we might otherwise have opted for, and we ordered more (and more expensive) food than we otherwise might have - potentially over and above the 5 euros or so per meal that we "saved".

So that's another major factor when it comes to paying a fixed price to receive a discount on future purchases - I think an offer like that relies on the tendency of people to want to get their money's worth, and generally inspires them to buy more than they might otherwise have bought.

Granted, unless you're suddenly stricken with the impulse to take the train someplace new every day just because you can, this is probably less of a factor with something like what you're describing.

Read more...

Daniel

It's even more interesting. As the european soccer championship is about to begin, there is a "fan discount card", which gives you a 25% discount on all tickets purchased between 1st april until 30th june for just 19 $. and for every game won by the germans during the championship, it's validity is extended by 1 month.

Dave

Get the 50% off card, bill the universities you visit the full amount, pocket the rest. In no time you'll be a billionaire, it's flawless.

Barb

With the American Dollar so weak against the Euro - I think the $55 you spend on the card will be WELL worth it! I don't know the price of the next one up the ladder, but I think I would probably spring for that one...

Yuliy

But would you have bought the more expensive train card if it was one of two offerred: one with a 50% discount and another that was an unlimited rail pass?

DJH

The idea of having to buy a discount package seems just a tiny bit fishy to me. Sure, depending on my purchases it could work out in my favor ... but if a company is feeling generous and wants to offer a discount, why sell the discount? Why not, instead, offer either of these:

1. A slightly-lower discount on all purchases, filtered to certain customers by e.g. coupons or customer-loyalty cards?

2. A frequent-buyer discount/rebate, where after X number of purchases you get a refund, a single free purchase, etc. (can be coupled with loyalty cards listed in #1 for tracking purposes)?

Example: I have a loyalty card with an office-supply store. As I accumulate purchases they send me rebates or other offers which can be substantial. I don't pay to have it, and if I'm not a frequent customer, I don't get much if anything in the way of discounts.

I also have a (free) loyalty card with a bookseller, but shop once in a great while at a competing bookseller. This second store has its own discount program, but you must buy your way in (as is the case with the German rail discount card). So far I have refused to participate; moreover, I tend to avoid this store in favor of the first, knowing I can get free discounts there. If I bought enough at the 2nd store, I *might* ultimately get a better deal, but I'm a "bird in the hand is better than 2 in the bush" guy and am not chancing it. (Not to mention, my book-buying history suggests I wouldn't make the barrier anyway.)

One other unrelated point: Hamermesh posted, "I have to trade off this fixed cost against the savings in the face of uncertainty about how many tickets I'll be buying and the likelihood that much of my train travel expenses will in any case be reimbursed by universities that invite me to lecture." Hmm. Given that he'll be getting support from these universities, isn't it incumbent on him to be a good stewart of their largesse? In other words, he should not let the possibility of reimbursement change whether or not he uses this card ... his first responsibility should be to get the most for his money, whether or not it's his or someone else's.

Read more...