I don't get your comparison to VC model. Sure it's temping to sell $10 for $5 and many VCs fund this business for a while. But the difference is there isn't an infinite backstop. It's not really new or innovative to give things away from "free" and fund it through some other means. But that's the problem. There's a disconnect with the service and what it costs.
You should charge roughly what it costs to operate because that's information. People should ask why it costs so much. People should consider alternatives. Trying to remove prices is like fighting climate change by removing thermometers.
At the moment, we (in the U.S. anyway) don't charge for tht true cost of operating roads and private cars, which makes transit look bad in comparison. If we want to make transit look reasonable, we need to stop pretending cars are so cheap.
That is only true if public transport is supposed to participate in the free market economy, which it doesn't have to.
If it is decided by a city government that we want public transport as a public service, paid for by taxes and other means then removing prices is an option that could make sense in the right situations.
Then it's covered by the government and cost is more or less ignored. It still costs something but now there is no or little visibility as to how much it costs which is obviously bad for incentives and general governance
Bad for who? The incentive is for more people to use the system, since we are aiming for a Greater Good kind of outcome. Cost and efficiency becomes a government problem, which we manage through policy and voting.
The road system doesn't have a price tag per trip, yet it's costs are managed through policy and governance. No difference here in my opinion.
I don't meant to compare the VC model specifically (though I can see the givaway comparison now that you mention it), just innnovation generally.
I think your point about economic signals is very good - I wonder if any locality charges at cost; does NYC do it now? - though 'charging at cost' undermines the goals: universal mobility, reducing climate impact, reducing congestion, and (I think) increasing economic liquidity and competition (e.g., in the labor market, in retail, etc.).
We need another solution: Maybe vouchers for people based on income? That becomes much more complex.
Also, I would gues it impacts ease of use and adoption - imagine being able to just hop on any passing bus, as opposed to finding your payment, going only through the front door, paying, etc.
You should charge roughly what it costs to operate because that's information. People should ask why it costs so much. People should consider alternatives. Trying to remove prices is like fighting climate change by removing thermometers.