Berlin public transit has always operated on an honour system, i.e. there are no barriers to entering the subway or trains and bus drivers merely glance at tickets that passengers show. In principle this is a very pleasant system as it simplifies walking into stations and also speaks to a certain trust in human nature.
Most locals who use the system regularly are likely to have monthly passes that come in an annual “subscription”. The pass is even transferable (i.e., I can lend you mine when you come to visit) and allow an additional rider and three kids under 14 in the evening and during weekends. Obviously, the girls will have monthly student tickets, the first at €27, the sibling card at €17.
There are regular checks. These used to be done by uniformed transit employees making it fairly easy to avoid them. Unfortunately (or, perhaps not) I have always been terrible at riding without a ticket, even just for a station or two. So, I happily buy my monthly pass and carry it everywhere.
I don’t know if there’s real data on the relative cost of losing some ticket sales vs installing gates, etc. The lack of gates also obviates the introduction of fancy electronic tickets like the Compasscard, as convenient as those are. You can purchase and “carry” your ticket on a mobile.
Another cost is perhaps more unfortunate, i.e. enforcement is rigid. I was just on a train where a visitor (Southwestern German accent) had been supplied with a ticket by her Berlin-resident son, but couldn’t find it in her materials. If she was lying, she deserved to be let go for her acting talent, but I’m pretty sure she was not lying. An honest mistake. In Vancouver it would have been almost certain that she would have been excused, just think of the many times that kids end up getting waved through on the bus because they don’t have change or forgot their tickets.
Here, however, she had to show her id and will have to pay a fine of €60. So while the system assumes the good in passengers, it is apparently or at least in this instance unable to be reasonable and forgiving.