Originally posted on https://parkingboxx.com/parking-systems
To gate or not to gate parking systems is often the question.
When procuring a parking solution, how can you know whether you need a gated system?
It isn’t necessarily about the scope of your parking operation. Even owners of large parking facilities, including multilevel garages, sometimes choose an ungated, metered parking system. And for good reasons, as we’ll discuss.
In an assessment on behalf of the City of Miami Beach, Walker Parking Consultants performed an “Analysis of Gated v. Metered Enforcement” methods, in 2015. The assessment provides solid insight into when gated makes sense, and when a metered parking system may be appropriate.
According to Walker, 90% of paid parking garages in the US have barrier gates (p.1). While both metered and gated systems have advantages and disadvantages, gated systems allow for reliable revenue capture with nil enforcement costs. At the same time, metered systems are an ideal solution for street parking and present certain financial advantages.
In this article, we look in more detail at the pros and cons of gated smart parking systems versus metered systems, with a focus on costs and revenues.
How to Evaluate Gated vs. Metered Parking System Costs
Without question, the initial investment in a gated parking system exceeds that of a metered system. But, upfront costs are only part of the equation. It’s essential to factor in other considerations, including installation costs, maintenance costs and operational costs.
Here, we’ll share insight into how these costs accrue for gated and metered parking systems.
Capital CostsWalker Parking Consultants estimated that the initial costs for a gated system would account for approximately 25% of the projected annual parking revenue in the first year (p.6). That is, the City would recoup the costs of the gated system in just one fiscal quarter.
In comparison, the cost for an ungated multi-space metered (MSM) system was estimated at approximately 12% of projected annual parking revenues in the first year (p.6). The City could thus anticipate recovering the costs of the metered system in approximately 6 weeks.
In both scenarios, the ROI for the capital investment is excellent. Naturally, though, the difference between 12% and 25% is significant.
Gated systems are more expensive because more equipment is required. They require not only gates, entry ticket machines, pay stations, and exit machines, but also servers and workstations.
Metered systems require only the meters themselves, and can be hosted for a fee, negating the need for servers.Installation CostsGated systems are also more expensive to install. “Installation requires equipment islands, power and communication infrastructure and planning for vehicular queuing at both the entrances and exit lanes as cars will need to wait for the entry or exit transaction to be conducted.” (Walker, p. 3)
In contrast, meters can be installed in as little as a day.
According to Ryan Baker and Chris Chettle, Certified Administrators of Public Parking, power supply can significantly affect the cost of meter installation and ongoing expenses. AC-powered meters incur higher costs for routing power. Solar (where an option), requires no routing, and both the installation and operational costs are lower. (p. 26)Maintenance CostsMost parking systems, whether gated or metered, will have a useful life of eight to ten years, “depending on frequency of use, climate, and how well it’s maintained…however there are many instances of parking equipment lasting far longer. Maintenance and repair costs typically increase as the equipment ages.” (Walker, p.18)
So, how do the maintenance costs of a gated parking system compare with those for meters?
Gated system maintenance costs are relatively simple, comprising equipment maintenance and warranty costs.
Contrast this to metered parking system maintenance, which includes:
- Meter warranty
- Hosting services
- Transaction fees
- Maintenance and warranty on enforcement technology (more on this below)
- Enforcement technology licensing and support
- Maintenance and gasoline for enforcement vehicles
- Meter maintenance labor
Nevertheless, the maintenance and warranty costs for a gated system can be higher than for a metered parking system. There are more moving parts in a gated system and the parts are more expensive to replace.
How much more will you pay for gated parking maintenance?
Walker Parking Consultants estimated the ongoing maintenance costs of a gated system could approximately double the maintenance costs for a metered system. But, there’s no cause for alarm. To put this in context, Walker projected gated parking maintenance costs at just under 2.5% of revenue, a modest outlay. (p. 7)Operational CostsStaffing, by far, constitutes the most significant operational cost, and this is where the assessment gets surprising.
As with capital costs and maintenance, you would expect a gated parking system would be more expensive to operate. The gated system is more complicated, after all, whereas a metered system is self-serve; no parking attendants are required, and the only staff needed to run a metered parking system are there to perform occasional maintenance and collect cash from the machines.
But metered parking systems require much more labor to enforce payment. Meters are operated on the honor system, and people are kept honest by enforcement, which is costly. These costs can include:
- Pay and benefits for enforcement agents to parole and cite infractions
- Costs of enforcement technology (like mobile license plate recognition technology)
- Purchase of enforcement vehicles (e.g. for large garages or multi-garage operations)
Walker estimates that for the City of Miami Beach to maintain a high 85% payment compliance rate, they would need to spend approximately 15% of projected parking revenues over a ten year period. (p.8)
Compare that again with the maintenance cost of a gated system, at an estimated 2.5% of projected revenues per year for the City of Miami Beach (Walker, p. 7). Enforcement costs quickly become a bigger consideration than maintenance costs.
According to Walker, “(w)hile the metered system is less expensive to procure install and maintain, the labor required to effectively enforce the garages make (it) more expensive to operate” (p. 9).
Revenue Capture from Gated vs. Metered Parking SystemsAccording to the International Parking Institute survey, demand for greater parking revenue is one of the top 10 trends in parking today (p. 50). This comes as no surprise. For private and public parking facility owners, parking revenue must justify the use of resources.
Gated parking systems, by design, garner 100% of revenue. Parking customers must pay their ticket to exit the parking facility. This feature makes it easier to estimate revenues for gated parking systems.
In contrast, there are several factors that must be considered to estimate revenues from a metered parking system.Meter Compliance RatesRevenue for metered parking systems depends, in part, on payment compliance rates. Where enforcement is vigilant, compliance rates are higher, but so are costs.
The City of Miami Beach asked Walker Parking Consultants to evaluate the impact of parking citations, or parking tickets, on revenue in a metered system. Walker’s analysis shows that citations can generate additional revenue to offset the costs of enforcement, but several factors must be considered. The revenue from citations varies depending on the:
- Citation capture rate (how many infractions lead to tickets)
- Collection rate (how many tickets are paid in full)
- The amount of the fines levied/ the average parking ticket fee
Citation Revenue DistributionIn some cases, revenues from citations may be distributed to other stakeholders. For example, the City of Miami Beach renders a percent of citation revenue to the County. This distribution of revenues must be factored into the calculation. (Walker, p. 11)
Revenue from OverpaymentThere is yet another unique calculation involved in metered parking system revenues. Parking customers sometimes overpay at a meter, to avoid a possible citation. In the case of Miami Beach, Walker estimated that a conservative 3% of additional revenues could be anticipated from overpayment at meters (p.11).
Overpayment at meters is less likely with a mobile payment option, like our P-123. Using P-123, customers can extend their time remotely. This reduces overpayment revenues, but increases customer satisfaction.
It should be noted that overpayment occurs with gated parking systems as well. When customers pay by the hour, their fee is rounded up to the nearest hour. In a pay-by-the-hour parking lot, the rate for a 70-minute session is the same as the rate for a full two hours. (Walker, p.18)Revenue LossAccording to parking consultants, Kimley-Horn and Associates, there is a revenue advantage to choosing a parking system with the capacity to self-report when full. Revenue losses can be averted if the machines are never allowed to remain full. (p. 13)
Kimley-Horn also points out the importance of built-in accountability. “Since revenue is tracked and all access to the revenue compartment and coin vault can be recorded and audited, “leakage” is greatly reduced” (p. 13). This is especially true when access is controlled electronically and fully auditable.
Parking systems can be configured to issue email or text alerts when bill or coin areas are full, low, or to flag a completed collection. Some parking meters have individual access codes for collectors. Meter collectors must enter their code to log in and run audit reports before collecting cash. Failure to log in triggers an alarm and email or text alerts to the parking system management.
Kimley-Horn report that “vendors’ back-end meter management and revenue tracking software vary in capability. In fact, this aspect of a manufacturer’s product line – i.e., the back-end software, has recently become a significant differentiator among vendors” (p. 13).
Having parking software that offers a high degree of accuracy and timely revenue data, plus advanced integration, ensure that many business goals may be achieved.Why POF Gated Parking Systems Have Lower Costs and Higher RevenuesAbove, we discussed the operational costs of gated parking systems versus metered parking systems. It’s clear that labor costs are higher for a metered parking system. But, the labor costs for operating a gated parking system can be driven lower still with automation.
A traditional gated system relies on cashiers to issue tickets and take payments. Payment machines make that transaction automatic, lowering labor costs and increasing revenue.
That’s why experts recommend moving to full automation for gated parking systems. Automated, gated systems can befull-featuredor flat-rate,to accommodate a variety of budgets and needs.More efficient Use of LaborIn a gated system with automated payment, there’s no need for a cashier on-site. In fact, having a combination of cashiers and payment machines can be counter-productive. In their assessment for the City, Walker recommended moving to pay-on-foot (POF) machines in a gated system, with no cashiers whatsoever.
They reasoned, “(w)hen any cashiers are present, some motorists will ignore the POFs and utilize the cashiers. We understand that a human presence will still be required and desired, however, an attendant who is free to walk around and assist customers at the POFs and or the exit lanes can be more effective than a cashier sitting in a cashier booth.” (p.58)
A mobile attendant is a nice touch, but assistance can also be provided remotely. One person at a remote workstation can operate multiple POF gated systems using intercom support and even opening gates remotely.
Add parking software and staff can manage even more sophisticated aspects of the parking system remotely. Ideally the parking software will allow you to manage rates, generate coupons, parking passes, track available spaces, manage card-based access control, and more, from any location.Faster Flow-Through of CustomersExperts recommend removing as many transactions from the exit lanes as possible in a gated parking system.
Even with credit cards, payment is the most time-consuming interaction for customers at a parking facility. That’s why gated parking systems with a high volume of customers often choose to run with POF machines and keep traffic moving quickly through the exit gates.
POF machines allow faster flow-through of parking customers. After customers pay at the walk-up machine, they bring their validated ticket to the exit to activate the gate. It’s a simple, fast transaction.
And using POF machines makes it easier to scale up to accommodate increased volume. If there are consistent queues at a walk-up machine, simply install an additional POF.Higher RevenuesMachines are unarguably more accurate than people, and this is true whether you use a POF system or an automated payment system at the gate. The less human interaction with ticket payment, the higher the revenues.
Automated parking payment systems are also more auditable. Reports generated by walk-up payment machines provide detailed insight into every transaction. What can be measured, can be managed.When a Metered Parking System Just Makes SenseGated systems clearly have cost and revenue advantages, but for some garages, a metered system is the right choice.
First, there’s simply no better solution for on-street parking, and Parking Meters are an excellent choice for pay-and-display, pay-by-space and pay-by-license.
Those who prefer meters in their parking garage tend to do so because a metered parking system:
- Is appropriate for smaller lots or areas that have low parking charges, and may not be able to support the higher investment required from gated systems;
- Requires a lower upfront capital investment;
- Is a simple solution, with few components;
- Can be installed quickly, with little to no civil work;
- Facilitate fast exit for high volumes of traffic in and out of the garage, without queuing.
- While metered parking systems require higher ongoing enforcement costs, for some owners, these costs are already committed and can’t be reduced.
Ultimately, what matters is ROI, and both gated and metered parking systems can yield a very high ROI, as the Walker analysis demonstrates. Whether the main expense is upfront, for a gated system, or ongoing, for a metered system, the revenues of paid parking can far outweigh the costs.
To get the best ROI, choose high-quality parking equipment that’s reliable and backed by great service, at a competitive price. Get Expert Advice on Your Gated or Metered Parking SystemsIf you need more information on the systems we offer, let’s talk. Contact us today to schedule a pressure-free, obligation-free consultation with one of our parking experts.
Call us at 888-920-4549 or request a consultation at https://parkingboxx.com/
Baker, R., & Chettle, C. (February 2015). Making the Most. International Parking Institute. Retrieved from parking.org/wp-content/uploads/2016/01/TPP-2015-02-Making-The-Most.pdf
City of Miami Beach, City Manager. (September 30, 2015). Commission Memo, ITN 2014 170 SW Gated Revenue Control System for Municipal Garages. Miami Beach, FL.
International Parking Institute. (September 2015). 2015 Emerging Trends. Report on a Survey Conducted by the International Parking Institute. Retrieved from parking.org/wp-content/uploads/2016/02/TPP-2015-09-2015-Emerging-Trends-in-Parking.pdf
Kimley-Horn and Associates. (October 9, 2014.) Seattle Performance-Based Parking Pricing Study. Retrieved from issuu.com/cdaadmin/docs/seattle_pbpp_study_final
WALKER PARKING CONSULTANTS. (August 10, 2015). Report to the City of Miami Beach, Parking Department. Gated v. Metered, Parking Revenue Control System Financial and Operational Analysis. Boston, MA.