# Investors Are Questioning the True Value of an Uber Ride



## Ca$h4 (Aug 12, 2015)

http://fortune.com/2017/08/23/uber-valuation-ride-pricing-investors
*Investors Are Questioning the True Value of an Uber Ride*
Fortune.com / Reuters  - 8/23/17

*What is the true cost of an Uber ride?*
That simple question is often lost among the many controversies facing the ride-services company as it tries to hire a new chief executive and resolve a bitter dispute with the old one, Travis Kalanick.

But it may be the most important question of all when it comes to determining the value of Uber Technologies, which has built its business on massive subsidies to both riders and drivers, producing huge losses in the process, and has yet to show that it can maintain growth without them.

Uber will report second-quarter financials to investors this week, which will offer fresh insight on whether the company can get profitable any time soon.

Although private, Uber has started releasing limited quarterly financial data, and in May reported a loss of $708 million for the first quarter, down from $991 million in the fourth quarter. The upcoming financial report will show further improvement on margins, according to an Uber executive, but the company continues to spend heavily on subsidized rides in certain markets.

The issue of Uber's valuation is hardly academic amid a boardroom battle over control of the company. Early backer Benchmark Capital has sued former CEO Kalanick and fought with other investors, some of whom have offered to buy Benchmark out.

The question vexing everyone is what the company is worth. Benchmark in a series of Tweets earlier this month indicated it believed Uber will soon be worth more than $100 billion. Outside investors contemplating buying Uber shares, however, have indicated they think the company is worth less than its current $68 billion valuation-perhaps much less.

2/ An Uber accountable to serving its entire ecosystem -riders, drivers & employees- stands to be one of the defining companies of our time.

- Benchmark (@benchmark) August 7, 2017
4/ We have immense confidence in Uber's 1000s of employees & are excited about what they will accomplish with the right new CEO.

- Benchmark (@benchmark) August 7, 2017
Other investors are already discounting company shares. Four mutual fund companies holding Uber investments recently marked down their shares by as much as 15%, according to the latest disclosure documents released.

*Reckoning Soon?*
Uber's losses stem from its drive to win global market share at almost any cost. That strategy was built on the assumption that Uber could achieve a dominant position in many big cities quickly and eventually raise prices. Kalanick himself said low fares were temporary.

But eight years in, the strategy is now in doubt as competition in many markets continues to intensify. Uber must solve the problem of how to eliminate subsidies without losing customers and thereby undercutting its valuation.
"There is going to come a reckoning and they are going to have to raise prices," said Brent Goldfarb, associate professor of management and entrepreneurship at the University of Maryland. "But we know what happens when you raise prices-demand goes down, and perhaps substantially so."

Uber has raised about $15 billion in funding since 2010, enabling it to discount fares and dole out bonuses to drivers that have at times exceeded $1,000.

In 2015, Uber passengers were paying only 41% of the actual cost of their trips, according to an analysis by transportation industry consultant Hubert Horan, based on financial statements from Uber.

Big discounts continue even in Uber's most mature market, its home city of San Francisco, where as recently as June it was offering some passengers 50% off their next 10 rides and $3 carpool rides, a cheaper rate than two years ago.

"I've gone crosstown in San Francisco for $12," Goldfarb said. "There is no way that makes economic sense."

*False Signal*
The Uber executive who spoke to Reuters pointed to a new "upfront" fare system that gives passengers a quote before their ride starts as one of Uber's key strategies to solving its pricing problem. In effect, it provides Uber a way to charge more without explicit per-mile fare increases.

The new system also uses an algorithm to better price rides to minimize losses. Someone requesting Uber's carpool service on a route where there are unlikely to be other passengers to share the ride, for instance, will be quoted a higher price so the company does not have to eat the cost, said the executive, who asked not to be named.

The executive added that in the last year or so Uber has reduced its blanket subsidies and become better at targeting its promotions to both riders and drivers.

_Get Data Sheet, Fortune's technology newsletter._

In ride-hailing, subsidies are necessary when first launching a new city, investors argue. A company needs lots of drivers and passengers to create a marketplace that works, and offering bonuses and discounts is the best way to recruit them.

But subsidies can create an artificial signal about the size of the market: many customers might be using the service only because it is cheap or free.

Once subsidies are turned off, "How do you know where the bottom is?" said Bejul Somaia, a partner at Lightspeed Venture Partners, which is not among Uber's backers.

Uber already knows that higher prices scare off customers. A 2016 study by economists and Uber data experts found that when Uber alerted passengers that fares had doubled-part of Uber's older "surge pricing" scheme-ride purchases immediately fell by about 40%.

*Eight Cent Rides*
The Uber executive argued that higher fares would have only a minimal impact on ride volume.

Indeed, data from the New York taxi business suggest a modest impact in the United States. Industry research shows that, historically, when cabs raised fares by 20%, they lost 4% to 5% of their customers, said Bruce Schaller, a transportation consultant and former deputy commissioner at the New York City Department of Transportation.

"They have room to raise prices," Schaller said, speaking of Uber. "There is no question to me as to whether this can be a profitable business."

But unexpectedly tough competitive pressure from Lyft, Uber's chief rival in the United States, has hindered Uber's efforts to become profitable. Uber has steadily lost U.S. market share to Lyft since last October, and now has 78% of the market, down from 85% in September, according to consumer spending data firm Earnest Research.

Subsidies have been especially debilitating to Uber in markets in Asia and the Middle East, where it is up against popular, well-funded local ride-service companies such as Ola, Grab and Careem.

In India, a price war with Ola pushed prices down as low as 8 cents per kilometer-even the Uber executive said prices there are too cheap. But there's little sign the company is turning a corner in the subsidies war. When Uber ended expensive driver incentives in the country, drivers went on strike, crippling the service.

The region has sucked billions from Uber's coffers, raising the prospect that it could be forced to sell to local partners and abandon some countries, as it recently did in China and Russia.


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## UberProphet? (Dec 24, 2014)

And not one word about the largest subsidy of all. The subsidy from the drivers.


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## Rakos (Sep 2, 2014)

UberProphet? said:


> And not one word about the largest subsidy of all. The subsidy from the drivers.


Oh that's easy...

it's the new tipping function...

That's it's new slush fund...

Rakos


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## WaveRunner1 (Jun 11, 2017)

Rakos said:


> Oh that's easy...
> 
> it's the new tipping function...
> 
> ...


Tipping was a way to get drivers to be contempt while Uber continues its upfront fares scam and increased booking fees. This was a way to trick drivers into thinking they will earn more while being robbed. Uber takes in well over 25% of the trip fare and in some cases as high as 50%.


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## Veju (Apr 17, 2017)

On minimum fares, they get upwards of 60% from what I've seen. The longer rides are normally more along the lines of 20-30%.


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## ShinyAndChrome (Aug 18, 2017)

That 41% fare thing has to be common core math because I I drive a rider for $15 and I am okay taking $9 of that, uber $5, and bs fees another $1, there is no way that ride should actually cost $36.59 with uber now getting more like $25 just to get the rider in my car.


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## 2Cents (Jul 18, 2016)

ShinyAndChrome said:


> That 41% fare thing has to be common core math because I I drive a rider for $15 and I am okay taking $9 of that, uber $5, and bs fees another $1, there is no way that ride should actually cost $36.59 with uber now getting more like $25 just to get the rider in my car.


Clearly you are not in the transportation industry.

#fübrn


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## ShinyAndChrome (Aug 18, 2017)

2Cents said:


> Clearly you are not in the transportation industry.
> 
> #fübrn


Business is business.

So to be clear, you believe that a trip that currently costs the rider $15 over 15 miles or whatever should actually cost the rider about $37, with uber pocketing $25 of that just to break even on that trip. I disagree.


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## Oscar Levant (Aug 15, 2014)

Ca$h4 said:


> http://fortune.com/2017/08/23/uber-valuation-ride-pricing-investors
> *Investors Are Questioning the True Value of an Uber Ride*
> Fortune.com / Reuters  - 8/23/17
> 
> ...


"Uber alerted passengers that fares had doubled-part of Uber's older "surge pricing" scheme-ride purchases immediately fell by about 40%."

Yes, but riders know the surge is temporary. If the prices were permantely raised, and still cheaper than a cab, the fall off would be no where near that much.


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## UberProphet? (Dec 24, 2014)

Oscar Levant said:


> " If the prices were permantely raised, and still cheaper than a cab, the fall off would be no where near that much.





Oscar Levant said:


> "Uber alerted passengers that fares had doubled-part of Uber's older "surge pricing" scheme-ride purchases immediately fell by about 40%."
> 
> Yes, but riders know the surge is temporary. If the prices were permantely raised, and still cheaper than a cab, the fall off would be no where near that much.


I disagree. If you double the price in Tampa Bay, I think several interesting things happen.

1st, the price of an XL is now the same as a cab van.

2nd, the advantages of taxis become much more interesting and appealing. Bigger vehicles, instant hailing and experienced knowlegeable drivers with licensing and insurance.

3rd, many Uber customers cannot afford to go out at the higher rate. Assume 2 girls with $50 to spend. $10 each way in an Uber leaves $30 to drink with. The cab today costs $22 + $3 tip = $25 X 2 Or the entire $50, no drink money, so stay home. But at $20 each way Uber, many will stay home.

4th, The customers who have more than $50 might still go out but on the way home might take the cab in front of them and pay the extra $5. Why wait 10 minutes for an Uber or stand in the rain or wait 25 minutes for surge to go away?

5th, current drivers will make less money than they think because the number of drivers will increase while the number of fares decreases.

Surge, by the way, becomes an endangered species. And cancel fees might disappear too as customers will go outside to see if there is a cab right there before they order an Uber and get charged if they cancel.

Be careful what you wish for, because you just might get it!


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## Uberfunitis (Oct 21, 2016)

ShinyAndChrome said:


> Business is business.
> 
> So to be clear, you believe that a trip that currently costs the rider $15 over 15 miles or whatever should actually cost the rider about $37, with uber pocketing $25 of that just to break even on that trip. I disagree.


I believe a trip should cost as much as Uber can get a passenger to pay. Likewise a driver should make as much as they can get Uber to pay them. The two are separate and have their own supply and demand curves that are independent of each other.



UberProphet? said:


> I disagree. If you double the price in Tampa Bay, I think several interesting things happen.
> 
> 1st, the price of an XL is now the same as a cab van.
> 
> ...


Also in my area many use Uber for their daily commute. If you have an increase even a relatively small increase that is a quite large increase to the budgeted travel expense as you multiply that increase by the 40 rides the average commuter takes per month just to go back and forth for work.


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## ShinyAndChrome (Aug 18, 2017)

Uberprophet in my area taxis are twice the price of uber, pretty much exactly. I drove a guy 4 miles last night in the middle of a 2X surge and he paid total $17. He said the standard price on a cab for a local trip was $25. He then went and still tipped me $4 and was happy to have saved money. And, I was there in a few minutes vs the taxi. The thing is around here Taxis are twice the price plus less available; in many cases uber could jack rates and be just fine.

I have also noticed that people use uber for commuting and in some cases it's pretty sad. I drove somebody home last night very far and I think uber must be costing her almost half her take home. Before uber she had to bum rides or rent a car (!).

Uber could almost work on a bid system where drivers enter bids. After driving the aforementioned passenger across and through the city I wanted to get back to where I started but I had no fare. I would have been willing to take on at a reduced rate in that scenario. Or, if I'm going out of the city and driving somebody even further away, i would only do that if I am making extra.


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## Rakos (Sep 2, 2014)

UberProphet? said:


> 5th, current drivers will make less money than they think because the number of drivers will increase while the number of fares decreases.


This is EXACTLY what has happened...

Over the last couple of years...

And it seems lately worse...

When will Uber cap the number...

Of drivers in a market...

THAT is the key to this...

In it's entirety...8O

Rakos


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## ShinyAndChrome (Aug 18, 2017)

Rakos said:


> This is EXACTLY what has happened...
> 
> Over the last couple of years...
> 
> ...


They won't cap, and they shouldn't. This business model is not about helping drivers and it shouldn't be. The reason it costs me $50 to take a 20 min ride to the airport in a cab is exactly because cab numbers have been capped. A healthy, efficient system like this one with the market driving the prices down as far as possible for riders precludes capping the number of drivers. If rates get to low, some drivers leave. If they keep going too low more leave until there aren't enough, then they go up. Then you know exactly what riders are willing to pay and what drivers are willing to work for and you hit equilibrium.

Drivers on the whole will never make more than they are now. We are nothing but business overhead and all good businesses always strive to drive down costs as much as they can. If you're paying a vendor $20 for something you sell for $40 you never voluntarily start offering to pay them $25 while still charging $40. All efficiently run industries have razor thin margins and this one shouldn't be any different. The very fact that people can quickly get an uber for little money and there are always drivers willing to do it is why uber has no reason at all to pay them more. The only reason this was a viable full time job was because of the artificial market forces cab companies had. Now that those have been reduced we are finding out that driving for a living is not actually viable; it's not valuable enough to the economy to make that tenable, not when people with late model cars are willing to do it for a take home of $12/hour.


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## Oscar Levant (Aug 15, 2014)

UberProphet? said:


> I disagree. If you double the price in Tampa Bay, I think several interesting things happen.
> 
> 1st, the price of an XL is now the same as a cab van.
> 
> ...


For years, riding in a cab was never meant to be cheap transportion, it was a luxury, like buying stuff at a convenience store.

Uber rates are not "market driven rates", they are arbitrarily set low by billionaires who could care less about the plight of drivers, while biding their time until driverless cars are perfected.

If market determined rideshare rates, they would be no where near where they are now, and the cheapskates would go back to riding in shuttles and busses, WHERE THEY BELONG.


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## effortx2 (Jun 21, 2017)

Oscar Levant said:


> If market determined rideshare rates, they would be no where near where they are now, and the cheapskates would go back to riding in shuttles and busses, WHERE THEY BELONG.


10+ years ago I would read article after article on the internet about how Millennials are so urban and how cities' downtowns (for example in the Rust Belt) would soon enough undergo a renaissance because of car-free Millennials. Now I read about how Millennials are every bit as suburban as their parents, most inner cities haven't revitalized themselves at all, and I suspect some of this may have to do with Uber.


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## ShinyAndChrome (Aug 18, 2017)

Oscar Levant said:


> For years, riding in a cab was never meant to be cheap transportion, it was a luxury, like buying stuff at a convenience store.
> 
> Uber rates are not "market driven rates", they are arbitrarily set low by billionaires who could care less about the plight of drivers, while biding their time until driverless cars are perfected.
> 
> If market determined rideshare rates, they would be no where near where they are now, and the cheapskates would go back to riding in shuttles and busses, WHERE THEY BELONG.


I should caveat what I said by saying it's not entirely market driven because both companies are losing money hand over fist, so we're not truly sure exactly what a "fair" fare is. But, I'm positive it is indeed below what taxis have historically made, because it's plainly evident that:

1) Uber/lyft drivers are willing to work for less per hour than taxies have historically made
2) Efficiency brought on by rideshare apps would, all things equal, far surpass the rider-miles/hour that a conventional taxi service has had to use (e.g. calling dispatch, they find a cab in the area, etc.).

Taxis have been historically a bit of a luxury, relatively speaking. I still absolutely believe a rideshare company with the models we've seen now can be profitable at rates similar to what customers are currently paying for fares, so customers end up getting rates much lower than taxis.

It's 100% not the case that uber/lyft can only be profitable if they charge customers the same fares they are used to paying with taxis. I don't believe it and neither do the investors who have pumped billions of dollars into this industry.



effortx2 said:


> 10+ years ago I would read article after article on the internet about how Millennials are so urban and how cities' downtowns (for example in the Rust Belt) would soon enough undergo a renaissance because of car-free Millennials. Now I read about how Millennials are every bit as suburban as their parents, most inner cities haven't revitalized themselves at all, and I suspect some of this may have to do with Uber.


I used to read those articles and laugh. I don't think it's uber, though, because most people still don't use it for main transportation. Millennials want to live outside of cities for the same reason I do. In fact just last night I had a chat with a millennial (It got me a nice tip) who agreed with me. He said he likes to know he can keep his doors unlocked and not worry about crap. His friends live in the city and are getting robbed, there's violence, etc. shifty people doing who knows what. I like the suburbs because I can let my kids out of the house and the only people they'll see all day are my neighbors who have lived here for years. Front door is unlocked all day long, never any crime, etc. Millennials eventually come to the same realization their parents did: raising kids in a congested city with bums walking past your house sucks. Whenever I visit large cities I think how cool it would be to live there if I wasn't me; if I didn't have kids and have to worry about their education. I love the suburbs. I wish I was even more rural than i am!


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## UberProphet? (Dec 24, 2014)

ShinyAndChrome said:


> I should caveat what I said by saying it's not entirely market driven because both companies are losing money hand over fist, so we're not truly sure exactly what a "fair" fare is. But, I'm positive it is indeed below what taxis have historically made, because it's plainly evident that:
> 
> 1) Uber/lyft drivers are willing to work for less per hour than taxies have historically made
> 2) Efficiency brought on by rideshare apps would, all things equal, far surpass the rider-miles/hour that a conventional taxi service has had to use (e.g. calling dispatch, they find a cab in the area, etc.).
> ...


Where is your evidence that "Uber/lyft drivers are willing to work for less than taxies have historically made"? All i ever read is they want $10-$15 an hour true net, the same as taxi's have ever made. They only think they are making that now by deluding themselves into thinking they don't have to properly allocate car costs to their rideshare activities.

Where is your evidence that "2) Efficiency brought on by rideshare apps would, all things equal, far surpass the rider-miles/hour that a conventional taxi service has had to use". What effeciencies? Again, a taxi costs $1 per mile for the car PLUS $1 per mile for the driver PLUS $.50 per mile for management and overhead totalling $2.50 per mile. The same as taxi's everywhere (give or take $.25 per mile)

Reality doesn't care that "I don't believe it and neither do the investors who have pumped billions of dollars into this industry."


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## ShinyAndChrome (Aug 18, 2017)

UberProphet? said:


> Where is your evidence that "Uber/lyft drivers are willing to work for less than taxies have historically made"?


The fact that they are doing just that.



UberProphet? said:


> Where is your evidence that "2) Efficiency brought on by rideshare apps would, all things equal, far surpass the rider-miles/hour that a conventional taxi service has had to use". What effeciencies? Again, a taxi costs $1 per mile for the car PLUS $1 per mile for the driver PLUS $.50 per mile for management and overhead totalling $2.50 per mile. The same as taxi's everywhere (give or take $.25 per mile)


You're right. Apps like uber/lyft don't introduce any efficiency at all. All these people investing in the companies are fools. Conventional taxi services with a dispatcher are already as efficient as this sort of transportation can get. There's no room to make it better and no way to lower costs.


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## UberProphet? (Dec 24, 2014)

ShinyAndChrome said:


> The fact that they are doing just that.
> 
> You're right. Apps like uber/lyft don't introduce any efficiency at all. All these people investing in the companies are fools. Conventional taxi services with a dispatcher are already as efficient as this sort of transportation can get. There's no room to make it better and no way to lower costs.


First of all every Uber/lyft driver I ever met thinks they are making $10-$15 per hour after their costs. While i disagree on their actual costs, they seem happy to be making the same as cabbies have historically made.

Second, the cost of a dispatch center is about $8000/week and so for a cab company like Tampa Yellow Cab with 300 cars there is a possible savings of $27/week per car or $4 per day.

Oh, wait a minute, Dispatch handles most customer and driver complaints/problems and Uber has Customer Service (i know, just go with me on this) so the "savings" must be tiny. Surely enough to justify Billions of investment. (hello Webvan, we miss you)


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## Oscar Levant (Aug 15, 2014)

ShinyAndChrome said:


> I should caveat what I said by saying it's not entirely market driven because both companies are losing money hand over fist, so we're not truly sure exactly what a "fair" fare is. But, I'm positive it is indeed below what taxis have historically made, because it's plainly evident that:
> 
> 1) Uber/lyft drivers are willing to work for less per hour than taxies have historically made
> 2) Efficiency brought on by rideshare apps would, all things equal, far surpass the rider-miles/hour that a conventional taxi service has had to use (e.g. calling dispatch, they find a cab in the area, etc.).
> ...


The current rates of fare are about equal to what it cost to operate a vehicle --they simply have to be higher in order to be fair. doesn't have to be as much as a cab but definitely higher, probably 3/4 of a taxi fare. Right now they're about half of the taxi fare.


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## ShinyAndChrome (Aug 18, 2017)

Oscar Levant said:


> The current rates of fare are about equal to what it cost to operate a vehicle --they simply have to be higher in order to be fair. doesn't have to be as much as a cab but definitely higher, probably 3/4 of a taxi fare. Right now they're about half of the taxi fare.


Maybe so. I do agree a ton of people have not studied their real vehicle costs. I took a look at my costs and taxes and earnings again tonight and I am going to try doing only lyft + uberxl. Uber x rates are probably too low for me to keep bothering with this to be honest. My tax bracket is high from my normal job and any taxed income 1099 is 50% tax rate. That after $.25/mile it doesn't really work at uber x rates for me. I just don't need the money that much.


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## I_Like_Spam (May 10, 2015)

Uber's advantages are that its well known, inexpensive, and all of the money goes through the app- including tips now.

Having your fingers on the cash- all the cash- this is something the cab companies never had, and its quite the advantage.

On the negative side, Uber doesn't own a fleet and relies on the work of tens of thousands of individuals, as well as the equipment they provide. People can and do leave at any time, there is a lot of competition changing hourly in so many locations.


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## Uberfunitis (Oct 21, 2016)

Oscar Levant said:


> For years, riding in a cab was never meant to be cheap transportion, it was a luxury, like buying stuff at a convenience store.
> 
> Uber rates are not "market driven rates", they are arbitrarily set low by billionaires who could care less about the plight of drivers, while biding their time until driverless cars are perfected.
> 
> If market determined rideshare rates, they would be no where near where they are now, and the cheapskates would go back to riding in shuttles and busses, WHERE THEY BELONG.


If the market were to truly set the rates they would be much lower than they are even now. If drivers were allowed to set their own rates and compete for each passenger everyone would be trying to undercut everyone else and rates would hit rock bottom. The only reason that taxi rates are as high as they were is the lack of free market as in over regulation in limiting the number of taxies allowed to operate in the city and price fixing in some of the larger cities were the rates were set within the city.

Uber has created a new market it is true, they took the luxury out of the cab now the more average person can use a taxi like service to go back and forth to work or out for a night and also allowed multiples of drivers to make some money who would never been able to under the old taxi model.


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## TwoFiddyMile (Mar 13, 2015)

Until they just run out of money.


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## I_Like_Spam (May 10, 2015)

Uberfunitis said:


> If the market were to truly set the rates they would be much lower than they are even now. If drivers were allowed to set their own rates and compete for each passenger everyone would be trying to undercut everyone else and rates would hit rock bottom.


I don't think that's true. Jitney service isn't cheaper than Uber here in Pittsburgh- and that segment of the transportation market is totally unregulated.

Uber is the responsible party for the current low rates for transportation. They have successfully sold the idea to hundreds of thousands that it is cool and cutting edge to partner with a multibillion dollar concern in the transportation revolution- by using their private cars as taxis.

They are able to pull it off, as many of the expenses the partners incur- depreciation, increased maintenance- are tough to distinguish from the private use of their autos, making partners think they are earning more than they are. This just isn't sustainable in the long run for Uber to rely on this for a long period, people will figure it out sooner or later, and sooner or later the "cool" factor will wear off of uber partnering.


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## Oscar Levant (Aug 15, 2014)

Uberfunitis said:


> If the market were to truly set the rates they would be much lower than they are even now. If drivers were allowed to set their own rates and compete for each passenger everyone would be trying to undercut everyone else and rates would hit rock bottom. The only reason that taxi rates are as high as they were is the lack of free market as in over regulation in limiting the number of taxies allowed to operate in the city and price fixing in some of the larger cities were the rates were set within the city.
> 
> Uber has created a new market it is true, they took the luxury out of the cab now the more average person can use a taxi like service to go back and forth to work or out for a night and also allowed multiples of drivers to make some money who would never been able to under the old taxi model.


I remember SideCar which allowed drivers to set rates and they couldn't compete against Uber and Lyft, they went out of business.

So much for your free market model.

Uber doesn't charge what the customer will bear, they charge what drivers will accept, and base the customer rate on that.

If Uber is paying drivers 75% of the rate, and drivers will accept 75 cents per mile, then uber charges $1.00 per mile. Now then, of course, in some cities uber is now doing "up front pricing" meaning they are charging customers a bit more than this, while keeping what they charge drivers held down, thus upping their intake percentage.

In other words, unlike most business who charge the highest customers will accept ( or factoring in competition) Uber charges what drivers will accept. I know this because I contacted someone high up the food chain, actually talked them on the phone, and that is what they told me.

Uber hasn't created a new market, they just siphoned business from taxis, shuttles, buses, and rental companies with Billionaire subsidized and thus artificially low prices.

There is nothing particularly genius about that, other than the app is a new thing, but that is about it.

What are you talking about "average person" ? I drove a cab for 10 frickin' years, and I would say most of the riders of taxis were below average people.


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## Uberfunitis (Oct 21, 2016)

Oscar Levant said:


> I remember SideCar which allowed drivers to set rates and they couldn't compete against Uber and Lyft, they went out of business.
> 
> So much for your free market model.
> 
> ...


What the customer pays and what the driver is paid are completely separate and independent of each other. What you say may have been true at one time but as you said with up front pricing that went out the window.

Why any company fails is usually complex and not totally reliant on pricing structure. Things like ease of use of the app and market timing are also very important. In my market Lyft for example for me is cheaper for most rides I take but yet they are not the dominate ride share company so there must be other things at play other than price alone that decide if a company sinks or swims.


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## Oscar Levant (Aug 15, 2014)

Uberfunitis said:


> What the customer pays and what the driver is paid are completely separate and independent of each other. What you say may have been true at one time but as you said with up front pricing that went out the window.


Not "out the window", I'd say "more or less derived from the driver's percentage, i.e., the driver's rate is the base point". 


> Why any company fails is usually complex and not totally reliant on pricing structure. Things like ease of use of the app and market timing are also very important. In my market Lyft for example for me is cheaper for most rides I take but yet they are not the dominate ride share company so there must be other things at play other than price alone that decide if a company sinks or swims.


The SideCar driver's were charging more than Lyft & Uber, and some were charging about what they charged, plus the added encumbrance of rider now had to select which driver. But I sure has heck don't recall them charging less. Who would charge less than $1.10 per mile? ( What uber charged in San Diego at the time). 
Uber ran it down to 90 cents for a few months, and drivers were quitting in droves, that is why Uber brought it back up. So this idea that drivers would go a lot lower if it were up to them is complete nonsense.



ShinyAndChrome said:


> It's 100% not the case that uber/lyft can only be profitable if they charge customers the same fares they are used to paying with taxis.


I haven't said this, nor have I met, read, or talked to anyone who has been saying rideshares have to be charging as much as taxis in order to be profitable.. But, to be profitable, for everyone, they do have to raise their rates. Right now, rates are about half of what taxis charge. In order to be profitable, I'd say 75% - 80% of what taxis charge, would be the profitable rate.


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## ShinyAndChrome (Aug 18, 2017)

UberProphet? said:


> I haven't said this, nor have I met, read, or talked to anyone who has been saying rideshares have to be charging as much as taxis in order to be profitable.. But, to be profitable, for everyone, they do have to raise their rates. Right now, rates are about half of what taxis charge. In order to be profitable, I'd say 75% - 80% of what taxis charge, would be the profitable rate.


UberProphet was questioning the efficacy of the business model as a whole, so I do think rates can be profitable for all involved at lower costs than taxis. You hold that position, too. I can't say exactly where that is long term, but I believe it is simply "less" than taxis historically have charged.

It almost wouldn't surprise me if some particularly hardcore left wing state put through a law that said when people sign up for rideshare the company has to issue a document outlining certain things they should consider. For example, uber has certainly never put any effort into telling me how this impacts my insurance, and it sure as hell hasn't put a single word to what this will cost me. I expect we can all agree that even less drivers would be doing this if they understood the true cost of this on their car.


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## 2Cents (Jul 18, 2016)

ShinyAndChrome said:


> UberProphet was questioning the efficacy of the business model as a whole, so I do think rates can be profitable for all involved at lower costs than taxis. You hold that position, too. I can't say exactly where that is long term, but I believe it is simply "less" than taxis historically have charged.
> 
> It almost wouldn't surprise me if some particularly hardcore left wing state put through a law that said when people sign up for rideshare the company has to issue a document outlining certain things they should consider. For example, uber has certainly never put any effort into telling me how this impacts my insurance, and it sure as hell hasn't put a single word to what this will cost me. I expect we can all agree that even less drivers would be doing this if they understood the true cost of this on their car.


Unfortunately that would imply some level of financial responsibility on their part.


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## tohunt4me (Nov 23, 2015)

Ca$h4 said:


> http://fortune.com/2017/08/23/uber-valuation-ride-pricing-investors
> *Investors Are Questioning the True Value of an Uber Ride*
> Fortune.com / Reuters  - 8/23/17
> 
> ...


Prices should have never been cut.

Uber has painted itself into a corner with rate cuts.
Drivers have suffered greatly because of it.


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## Uberfunitis (Oct 21, 2016)

Oscar Levant said:


> Not "out the window", I'd say "more or less derived from the driver's percentage, i.e., the driver's rate is the base point".
> 
> The SideCar driver's were charging more than Lyft & Uber, and some were charging about what they charged, plus the added encumbrance of rider now had to select which driver. But I sure has heck don't recall them charging less. Who would charge less than $1.10 per mile? ( What uber charged in San Diego at the time).
> Uber ran it down to 90 cents for a few months, and drivers were quitting in droves, that is why Uber brought it back up. So this idea that drivers would go a lot lower if it were up to them is complete nonsense.


There is no derivation not as the profit to the driver is all over the spectrum with the driver making more than the rider paid on some of the pool trips to Uber taking about half on other trips. Ubers pricing to customers has nothing to do with driver pay at all.

Sidecar did not have the driver base that Uber does for example I believe with Uber drivers being so numerous and people willing to sit idle for hours at the airports for less than four dollars that the market has changed now.


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## Kodyhead (May 26, 2015)

UberProphet? said:


> 2nd, the advantages of taxis become much more interesting and appealing. Bigger vehicles, instant hailing and experienced knowlegeable drivers with licensing and insurance.
> 
> /QUOTE]
> 
> Customers don't care about licenses and insurance, might be a good point about bigger vehicles, but thats why lux and select costs the same as taxis in most markets. Many areas there is no hailing either


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## phillipzx3 (May 26, 2015)

Oscar Levant said:


> "Uber alerted passengers that fares had doubled-part of Uber's older "surge pricing" scheme-ride purchases immediately fell by about 40%."
> 
> Yes, but riders know the surge is temporary. If the prices were permantely raised, and still cheaper than a cab, the fall off would be no where near that much.


$28 bucks from downtown Portland to the airport. $31 for the same ride in a cab. If it rains, $50 bucks Uber, 31 bucks in a cab. If it rains AND the wind blows....$75 with Uber, 31 in a cab.

Flag drop In Portland, $6.50 with Uber. Flag drop with the first mile in a cab, $5.50. Uber is cheaper, SOMETIMES, but not all the time.


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## TwoFiddyMile (Mar 13, 2015)

phillipzx3 said:


> $28 bucks from downtown Portland to the airport. $31 for the same ride in a cab. If it rains, $50 bucks Uber, 31 bucks in a cab. If it rains AND the wind blows....$75 with Uber, 31 in a cab.
> 
> Flag drop In Portland, $6.50 with Uber. Flag drop with the first mile in a cab, $5.50. Uber is cheaper, SOMETIMES, but not all the time.


Plus, wait time. You or me on a stand, zero wait time to get rolling. Closest Uber is 3 min away. And counting. And counting.


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## 2Cents (Jul 18, 2016)

Uberfunitis said:


> If the market were to truly set the rates they would be much lower than they are even now. If drivers were allowed to set their own rates and compete for each passenger everyone would be trying to undercut everyone else and rates would hit rock bottom. The only reason that taxi rates are as high as they were is the lack of free market as in over regulation in limiting the number of taxies allowed to operate in the city and price fixing in some of the larger cities were the rates were set within the city.
> 
> Uber has created a new market it is true, they took the luxury out of the cab now the more average person can use a taxi like service to go back and forth to work or out for a night and also allowed multiples of drivers to make some money who would never been able to under the old taxi model.


Disagree.
Rock bottom would be what the rates that are set now and the highest would be what ever the driver sets it to be. If you are truly an independent contractor then you should be able to be allowed to set your own rates. Whether it's the lowest rate that they currently have now to what ever you feel you should charge. The market will dictate how much you can charge not fübr. It was never designed to be cheaper than a taxi but yet these ride share drivers fail to see that the rates are this low to force the transportation companies out of business.
Lack of free market has nothing to do with taxi rates. It's the fact that transportation companies know what it cost to operate vehicles a figure that the ride share companies fail to disclose any where.
It's a matter of time before this ride share ponzy scintillates and who is left holding the empty bag? The ride share drivers who perpetuated this scheme, that's who.


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## Uberfunitis (Oct 21, 2016)

2Cents said:


> Disagree.
> Rock bottom would be what the rates that are set now and the highest would be what ever the driver sets it to be. If you are truly an independent contractor then you should be able to be allowed to set your own rates. Whether it's the lowest rate that they currently have now to what ever you feel you should charge. The market will dictate how much you can charge not fübr. It was never designed to be cheaper than a taxi but yet these ride share drivers fail to see that the rates are this low to force the transportation companies out of business.
> Lack of free market has nothing to do with taxi rates. It's the fact that transportation companies know what it cost to operate vehicles a figure that the ride share companies fail to disclose any where.
> It's a matter of time before this ride share ponzy scintillates and who is left holding the empty bag? The ride share drivers who perpetuated this scheme, that's who.


Why should the current rate be the bottom? Let the independent contractor decide if they are willing to work for less.


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## 2Cents (Jul 18, 2016)

They are working for less. But if they set it much lower it would hurt the ride share profits.


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## Uberfunitis (Oct 21, 2016)

2Cents said:


> They are working for less. But if they set it much lower it would hurt the ride share profits.


Sure the ride share company would me less if they are taking a percentage but they will not loose money it is the driver who may loose money if they don't charge enough to cover operations of their vehicle. However If for whatever reason I am willing to work at a profit of 1 or 2 or whatever profit I deem is ok than I should be allowed to compete at that price point. If we are truly a independent contractor than we should be able to set our price point at whatever lvl we choose. Uber could even charge a flat fee for driver access to the network to ensure that they make their money.


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## 2Cents (Jul 18, 2016)

eBay allows this. As long as fübr gets their 20-28% plus booking fee, they should allow this as well.


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## TwoFiddyMile (Mar 13, 2015)

Taxi rates are set by the city. Taxi owners negotiate with the city.
If the rate is set too low, watch the taxi owners re-registered in an adjacent city with higher rates.
We're not so stupid after all.


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## Uberfunitis (Oct 21, 2016)

TwoFiddyMile said:


> Taxi rates are set by the city. Taxi owners negotiate with the city.
> If the rate is set too low, watch the taxi owners re-registered in an adjacent city with higher rates.
> We're not so stupid after all.


Some things need government regulation such as safety items other times it is just a corrupt system built on bribes that work to help those already "in" at the expense of any new competition.


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## TwoFiddyMile (Mar 13, 2015)

Uberfunitis said:


> Some things need government regulation such as safety items other times it is just a corrupt system built on bribes that work to help those already "in" at the expense of any new competition.


Lol.
Uber in 8 years spent more on bribes toward states, countries and municipalities than taxis did in 100 years.


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## Uberfunitis (Oct 21, 2016)

TwoFiddyMile said:


> Lol.
> Uber in 8 years spent more on bribes toward states, countries and municipalities than taxis did in 100 years.


Taxis are no longer the ones that are "IN" and being protected it is the established rideshare companies now against new startups.


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## TwoFiddyMile (Mar 13, 2015)

Uberfunitis said:


> Taxis are no longer the ones that are "IN" and being protected it is the established rideshare companies now against new startups.


Keep telling yourself that.


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