# Cost of developing something like Uber App? Only $2000 then why is Uber losing money?



## ebrain (Oct 3, 2016)

Thats right. Asked my team to develop ride-sharing application for a smaller market (abroad) and total cost of application development turned out to be only $800 after 2 Android developers completed it within 2-Weeks. We are now adding iOS version and I dont see total cost getting beyond $2000 in total.

I am spinning my head here thinking what makes Uber lose money after earning Millions? What gives? Is this deep pockets of executives, marketing, or what?


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## Jc. (Dec 7, 2016)

2k? Not even a website


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## Mars Troll Number 4 (Oct 30, 2015)

ebrain said:


> Thats right. Asked my team to develop ride-sharing application for a smaller market (abroad) and total cost of application development turned out to be only $800 after 2 Android developers completed it within 2-Weeks. We are now adding iOS version and I dont see total cost getting beyond $2000 in total.
> 
> I am spinning my head here thinking what makes Uber lose money after earning Millions? What gives? Is this deep pockets of executives, marketing, or what?


well,

The problem is...

A. paying millions to corporate leadership
B. Paying millions in cash incentives/bonuses ect. (new driver bonus, garuntees, boosts where it doesn't surge, ect)
C. Bribes/fines to governments, municipalities, airports ect
D. Free rides to customers
E. Lobbying to get laws changed/removed
F. Money losing ventures such as uber exchange

This is how uber is losing money.

If your "company/whatever" leased cars to drivers and lost $9,000 per car, after paying each driver a $500 sign on bonus you'd be in the hole to.

The cab company i drive for... here's our sign-ons/incentives

1. Reduced taxi rental rates for new drivers
2. buy 12 rentals (in 14 calander days) get one free on taxi rentals. (not bogo,,, buy 12 in 14 days)
3. Reduced rentals for cars that are restricted from queuing at the airport/disney/universal studios. {it's $280 less a week for one of these}

How many of these *COST* money.. well they don't!
Discounting rentals is just lowering he profit margin, it's not costing them money. Having an El-cheapo taxi brand that only runs dispatch fares?.. well that's improving quality of service..

Even with a brand new driver, all they have to recoup in costs is the cost of running training class... they aren't paying out some ridiculous bonus.

How many uber drivers do you think quit before uber can recoup the cost of the signing bonus?


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## ebrain (Oct 3, 2016)

Jc. said:


> 2k? Not even a website


Admin CSR portal we are doing in ASP.NET and I have very experienced staff there who created design and webs-services for the mobile team. I dont see any significant cost there worth mentioning but you have a point. Let say total cost of uber clone is going to be $2500 but the question really is where is all the money going ... ?? MT has nailed it above. It is the extra baggage. I am going to keep it simple: Run Uber clone without charging drivers money. I make money when Uber comes to my market asking for share ;-)


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## Dug_M (Feb 16, 2017)

ebrain said:


> Thats right. Asked my team to develop ride-sharing application for a smaller market (abroad) and total cost of application development turned out to be only $800 after 2 Android developers completed it within 2-Weeks. We are now adding iOS version and I dont see total cost getting beyond $2000 in total.
> 
> I am spinning my head here thinking what makes Uber lose money after earning Millions? What gives? Is this deep pockets of executives, marketing, or what?


What I love is how every once in a while someone comes up with the line "*We'll just create our own app and startup a new company. Creating a mobile app that will work on all phones is easy*". It is easy if you just want to check the weather. Ever heard about "*Scalability*" (.org/wiki/Scalability).
Take a quick look at this white paper... You don't need to be an engineer to understand it..
*Building Large-Scale Distributed Systems* https://static.googleusercontent.com/media/research.google.com/en//people/jeff/stanford-295-talk.pdf

My Point... Building an enterprise level application that is scalable is not for the faint of heart. Next is how to handle big data. This alone is a huge management problem. A science in itself. Then the equipment banks of servers secondary synced locations for backup. The list goes on. Never mind what it would cost for the cellular data services and equipment. 
Below is a rideshare algorithm that might help your developers...
*A Real-Time Algorithm to Solve the Peer-to-Peer Ride-Matching ... http://www.its.uci.edu/its/publications/papers/ITS/UCI-ITS-WP-15-1.pdf*


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## peteyvavs (Nov 18, 2015)

ebrain said:


> Thats right. Asked my team to develop ride-sharing application for a smaller market (abroad) and total cost of application development turned out to be only $800 after 2 Android developers completed it within 2-Weeks. We are now adding iOS version and I dont see total cost getting beyond $2000 in total.
> 
> I am spinning my head here thinking what makes Uber lose money after earning Millions? What gives? Is this deep pockets of executives, marketing, or what?


The management has been skimming and laundering money since they started. No one in their right mind would invest in a scheme like Ube and Lyft unless they were trying to clean dirty money.


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## ebrain (Oct 3, 2016)

Dug_M said:


> What I love is how every once in a while someone comes up with the line "*We'll just create our own app and startup a new company. Creating a mobile app that will work on all phones is easy*". It is easy if you just want to check the weather. Ever heard about "*Scalability*" (.org/wiki/Scalability).
> Take a quick look at this white paper... You don't need to be an engineer to understand it..
> *Building Large-Scale Distributed Systems* https://static.googleusercontent.com/media/research.google.com/en//people/jeff/stanford-295-talk.pdf
> 
> ...


Thanks for the note but having a Masters Degree in Computer Science from top 5 CS Schools in the country + 15 years working for big corporations and owning my own enterprise class software company dealing with cancer labs I think I know enough to say I know what I am talking about. Maybe you have not been up to date. Data and bandwidth costs have come down quite a bit in past 5 years. Azure's calculator gives good idea: https://azure.microsoft.com/en-us/pricing/calculator/

As far as big data goes I dont know what else Uber is trying to accomplish but base ridesharing data does not even fit the definition of big data. If Uber has data management issue their design is flawed or they were too ambitious. Same thing with distributed systems design. I am not interested in serving markets as big as the US. It is small market abroad and believe me lots of small pockets do exist around the world where Uber, Lyft, etc have no penetration so my business model is let the big boys deal with big markets. Capture small markets for dirt cheap and keep selling to the big boys.

If a market costs me $3k to develop application and $300/month to operate I am fine with owning 10 markets. Hope it makes sense now.


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## Jc. (Dec 7, 2016)

ebrain said:


> Thanks for the note but having a Masters Degree in Computer Science from top 5 CS Schools in the country + 15 years working for big corporations and owning my own enterprise class software company dealing with cancer labs I think I know enough to say I know what I am talking about. Maybe you have not been up to date. Data and bandwidth costs have come down quite a bit in past 5 years. Azure's calculator gives good idea: https://azure.microsoft.com/en-us/pricing/calculator/
> 
> As far as big data goes I dont know what else Uber is trying to accomplish but base ridesharing data does not even fit the definition of big data. If Uber has data management issue their design is flawed or they were too ambitious. Same thing with distributed systems design. I am not interested in serving markets as big as the US. It is small market abroad and believe me lots of small pockets do exist around the world where Uber, Lyft, etc have no penetration so my business model is let the big boys deal with big markets. Capture small markets for dirt cheap and keep selling to the big boys.
> 
> If a market costs me $3k to develop application and $300/month to operate I am fine with owning 10 markets. Hope it makes sense now.


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## wk1102 (Dec 25, 2015)

I don't think they are "losing" money in tje sense we think. Its more like they are creatively/lavisly/foolishly spending combined with creative accounting to show a loss. They paid 680 million for Otto.


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## d0n (Oct 16, 2016)

ebrain said:


> Admin CSR portal we are doing in ASP.NET and I have very experienced staff there who created design and webs-services for the mobile team. I dont see any significant cost there worth mentioning but you have a point. Let say total cost of uber clone is going to be $2500 but the question really is where is all the money going ... ?? MT has nailed it above. It is the extra baggage. I am going to keep it simple: Run Uber clone without charging drivers money. I make money when Uber comes to my market asking for share ;-)


The app development isn't that costly, the cost comes in maintenance, security and servers, which is a bit higher than app development.

Uber's cash leak is legal, promotional, and over staffing.


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## peteyvavs (Nov 18, 2015)

ebrain said:


> Thanks for the note but having a Masters Degree in Computer Science from top 5 CS Schools in the country + 15 years working for big corporations and owning my own enterprise class software company dealing with cancer labs I think I know enough to say I know what I am talking about. Maybe you have not been up to date. Data and bandwidth costs have come down quite a bit in past 5 years. Azure's calculator gives good idea: https://azure.microsoft.com/en-us/pricing/calculator/
> 
> As far as big data goes I dont know what else Uber is trying to accomplish but base ridesharing data does not even fit the definition of big data. If Uber has data management issue their design is flawed or they were too ambitious. Same thing with distributed systems design. I am not interested in serving markets as big as the US. It is small market abroad and believe me lots of small pockets do exist around the world where Uber, Lyft, etc have no penetration so my business model is let the big boys deal with big markets. Capture small markets for dirt cheap and keep selling to the big boys.
> 
> If a market costs me $3k to develop application and $300/month to operate I am fine with owning 10 markets. Hope it makes sense now.


It makes perfect sense.


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## Trafficat (Dec 19, 2016)

ebrain said:


> Thats right. Asked my team to develop ride-sharing application for a smaller market (abroad) and total cost of application development turned out to be only $800 after 2 Android developers completed it within 2-Weeks. ?


2 Developers working for 2 weeks... let's say 40 hours a week times two people... so 160 hours is only $800? You have Android developers working at $5/hr?

Anyway, that aside, sounds like you can make some good money doing it. Good luck.

Wish I had more programming knowledge.


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## ebrain (Oct 3, 2016)

My development is offshore. It costs somewhere between $3 to $5 per hour to have very experienced Android developer there (that would cost $70-$100/Hr in the US) Rest of the infrastructure costs I am already paying as part of the other business I run. I'm sure companies like uber have also outsourced their development work hence the comparison.


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## sellkatsell44 (Oct 25, 2015)

So how does it look? How does it run? 

Making an app is easy. My old boss made an app. And she has no experience whatsoever. Was it complex? No. Was it pretty? No. Did it work? Yes.

And as Juno found out, it’s not merely just the developing of the app, it’s the running of said app, and developing the market for said app, etc.


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## ebrain (Oct 3, 2016)

sellkatsell44 said:


> So how does it look? How does it run?
> 
> Making an app is easy. My old boss made an app. And she has no experience whatsoever. Was it complex? No. Was it pretty? No. Did it work? Yes.
> 
> And as Juno found out, it's not merely just the developing of the app, it's the running of said app, and developing the market for said app, etc.


Yes making the app is easy. Now working on execution. First market is dominated by Rickshaws and Rental Cars with no presence of Uber or Careem (hint hint). Going to keep it simple. Will keep forum updated with the progress we make. To be honest if red tape was not there running app like Uber is not difficult at all. All you need to do is have the pockets to bear monthly hosting and infrastructure costs. Keep fare same like Uber/Lyft just dont charge drivers. They will happily market your app switch passengers to you. US is big market. I cannot afford to spend 1000s in hosting/infrastructure costs or I would have tried this.


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## sellkatsell44 (Oct 25, 2015)

ebrain said:


> Yes making the app is easy. Now working on execution. First market is dominated by Rickshaws and Rental Cars with no presence of Uber or Careem (hint hint). Going to keep it simple. Will keep forum updated with the progress we make. To be honest if red tape was not there running app like Uber is not difficult at all. All you need to do is have the pockets to bear monthly hosting and infrastructure costs. Keep fare same like Uber/Lyft just dont charge drivers. They will happily market your app switch passengers to you. US is big market. I cannot afford to spend 1000s in hosting/infrastructure costs or I would have tried this.


No.

It isn't.

Uber actually contracts part of the app out to third parties because there's more to the app than you understand.

But good luck, I'm sure you can kickstart, indiegogo or gofundme a few 1000s if that's all it took.


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## ebrain (Oct 3, 2016)

sellkatsell44 said:


> Uber actually contracts part of the app out to third parties because there's more to the app than you understand.


There is nothing in an app that an IT Professional wont understand. It is like telling a Physician he does not understand how human body works 

Every application follows what we call N-Tier architecture. There are clients, application servers, database servers, communications, security layer, backups and disaster recovery plus 3rd party service providers we must rely on. Nothing else can be there.

Lets break-down application related costs now.

*Client cost is fixed.* $3000. Cannot go any higher. Already done.

*Application and Database Servers:* High Availability Infrastructure is needed. That is why 2 nodes and a load balancer for every 10 'active' riders is something we are adding (which is very generous - keep in mind servers these days are auto-scalable so no need to pay for high CPU/RAM/etc all the times; only pay when needed). Three enterprise-class servers from Azure cost roughly $6k/month. Keep in mind they are supporting only 10 active rides at a moment. Lets add same for database servers as well although not needed. That brings us to $12k per month for application and database servers for a set of 10 active rides.

*Next comes communication.* Twillio offers text messaging at $0.0075 per message for 5M messages but rate drops to $0.0005 per message if someone buys over a Billion messages package. Average ride is 6-8 messages at the most so nothing to even mention here. So stay with me we are still at $12k per month per 10 active rides at any given moment of time.

*Next comes Google Maps.* They charge $0.50 per 1,000 requests. Not a significant charge again when you break it down to cost per ride.

*Next comes data transfer costs.* In our tests average ride generated around 50MB of data per ride. Per account storage needs were also below 100MB (images of license, docs, etc and I am being very generous here). So 10 active riders will be adding 500MB of data per second. Azure, for example, offers inbound data for free and outbound data is about 1 cent per GB. Even if we were sending a GB every second it would cost 1 cent every second so storage costs are not worth mentioning here when broken down to individual ride level.

*Next is backups and storage.* Azure has blobs and read/write formula but for simplicity I am being generous and giving it 10 cent per ride. Again not a significant cost for the operation. All in all we are at under 20 cents per ride cost plus the $12k/Month cost for servers discussed above.

*Lets now calculate monthly revenue* from 10 active rides assuming one rider joined the system and another one left every second and all rides were minimum fare rides .. so the ridesharing company will be making $1 per second (at least) totaling in over $2M in revenue after all the expenses.

So the question still remains where is all this revenue going? It is not related to the app. Like MT said:



Mears Troll Number 4 said:


> A. paying millions to corporate leadership
> B. Paying millions in cash incentives/bonuses ect. (new driver bonus, garuntees, boosts where it doesn't surge, ect)
> C. Bribes/fines to governments, municipalities, airports ect
> D. Free rides to customers
> ...


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## sellkatsell44 (Oct 25, 2015)

ebrain said:


> There is nothing in an app that an IT Professional wont understand. It is like telling a Physician he does not understand how human body works
> 
> Every application follows what we call N-Tier architecture. There are clients, application servers, database servers, communications, security layer, backups and disaster recovery plus 3rd party service providers we must rely on. Nothing else can be there.
> 
> ...


Then throw it up on a site to go ahead and get the funding for it, because you aren't willing to throw up the few thousand you estimate that will cost to run a duplicate Uber, because this is what you're talking about right? I gave you three common ones, I'm sure there are more.

You say you know so much, can even break it down. Awesome, wish Juno had heard of you before they sold out.

Talk is cheap. I'd love to see you throw it up.


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## ebrain (Oct 3, 2016)

sellkatsell44 said:


> Then throw it up on a site to go ahead and get the funding for it, because you aren't willing to throw up the few thousand you estimate that will cost to run a duplicate Uber, because this is what you're talking about right? I gave you three common ones, I'm sure there are more.
> 
> You say you know so much, can even break it down. Awesome, wish Juno had heard of you before they sold out.
> 
> Talk is cheap. I'd love to see you throw it up.


Argument is not about who can do it or not. Post is not about competing with Uber either but a question where revenue is going. You tend to believe it is related to software. I disagree, and gave you application related costs breakdown but you are still stuck at competing with Uber thought. Juno and others gave up not because they did not know how to develop app or run it but because Uber dominated their market.

I am not competing with Uber. No one can in the US (except Tesla; different discussion altogether). That is why I am in another market where Uber is not present and whole model is about selling my business to Uber if I get that market. Post is raising a question where this revenue is going that I just showed above ridesharing companies are making.


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## UberwithDan (Dec 2, 2016)

they arent losgin in the long run. we are all working to fund their research and development into autonomous vehicles. we are literally working ourselves out of a job lol. Its genius when you think about it.


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## ebrain (Oct 3, 2016)

UberwithDan said:


> they arent losgin in the long run. we are all working to fund their research and development into autonomous vehicles. we are literally working ourselves out of a job lol. Its genius when you think about it.


True, and Tesla is going to kill everyone since most of their Model 3 will be used by Uber/Lyft drivers helping Tesla collect massive amounts of data virtualizing every street first then build ridesharing platform. Uber and Lyft were trying to get ahead before Model 3 arrives relying on existing ridesharing data but no chance of survival when 10s of 1000s of Model 3 cars start collecting data. Irony is they will all be working for Uber but helping Tesla .. lol


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## steveK2016 (Jul 31, 2016)

Marketing. What good will your $2000 app be if drivers and riders dont know about it.


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## Irishjohn831 (Aug 11, 2017)

Easy, Duh...

They are losing so much money because of the high pay rates they give us happy drivers. 

Uber got biggest FU today when Alphabet bet big on Lyft.


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## _MACOSX (Jan 15, 2016)

Irishjohn831 said:


> Easy, Duh...
> 
> They are losing so much money because of the high pay rates they give us happy drivers.
> 
> Uber got biggest FU today when Alphabet bet big on Lyft.


What Uber does not understand that Google is watching and waiting to make a move at the right time. Hello Yahoo. What is Yahoo?


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