6 ms·

> And what most people miss, is that the 3.4 billion is the 30% cut Uber takes from a ride. Prices don't have to rise 20% to break even, prices have to rise 6%

> And what most people miss, is that the 3.4 billion is the 30% cut Uber takes from a ride. Prices don't have to rise 20% to break even, prices have to rise 6% No, they have to rise by more than that. Your math is technically correct (a 6% rise gives you an extra $700 million), but you are assuming that the price increase goes entirely to Uber. There is no way Uber can increase prices by 6% and give none of that upside to their drivers - they would flee to platforms offering better terms (like Lyft). If Uber was to be profitable this past quarter they wouldn't have needed an extra $700 million in fares, but an extra 2.3 billion - which is a 20% rise.

encoderer 9y ago
</conjecture> Lyft just isn't a real competitor outside of major American cities right now. Go to a city without an international airport and see how many lyft drivers there are.
- untog 9y ago
  Oh, for sure. But being spread thinly over dozens of small markets isn't necessarily a better idea than concentrating on a few large ones.
  - rtx 9y ago
    Counter example India, Lyft can now never come here. Soon it will be one of Uber's biggest market.
    - zda 9y ago
      Why not?
      - rtx 9y ago
        We had a local competitior backed by soft bank. They are in bad shape. All because of execution. I don't see any other company able to match that ruthlessness.
        marcosdumay 9y ago
        So, Uber will be able to take the entire market as long as they don't make it lucrative? That seems to be Uber's plan everywhere, and they look quite successful at it.
    - vr3690 9y ago
      Ola seems to be doing fine and I think they've some sort of partnership with lyft where at some point in time you'll be able to use the lyft app and hail ola rides. This hasn't happened yet, though.
- beager 9y ago
  I believe that Lyft doesn't have to compete globally with Uber to be a successful business in its own right. I also believe that Uber isn't immune from being crippled by competitors that operate in a very small but key subset of Uber's markets. There is very little network effect with Uber. Sure, you can hop off a plane anywhere in the world and open Uber to get a car, but that is a very small number of people overall. I would contend that most people use whichever ride-sharing service is available and most economical in their own city, and if that same service is available on the rare occasion that they travel, then bonus. Of course, if Uber beats everyone else to the punch with proprietary self-driving cars and undercuts prices profitably, they win. There seem to be some very large issues with that, however.
  - jpatokal 9y ago
    You're ignoring that businessmen who travel all the time are very heavy users of Uber and similar services. I'm not even a frequent flyer, but I'd estimate that a good 80-90% of my Uber usage is travel-related. At home, I have tons of other options to get around, but on a tight schedule in an unfamiliar city, I basically default to Uber all the time, because I rarely have the time or risk tolerance explore alternatives. One of the things I love about Uber is that I can use it in SF, Singapore, Manila, Helsinki, wherever. It also works sufficiently well that I have near-zero incentive to try out Lyft/Grab/Ola/whatever, particularly since this usually involves yet another tedious sign-up process of entering credit cards and PIN confirmations and yadda yadda.
    - Bakary 9y ago
      I think their point was that well-off people who travel all the time are still a tiny portion of the population.
      - jpatokal 9y ago
        Sure, but that tiny portion still supports the bulk of the airline and hotel industry, and (I suspect) a very disproportionate share of Uber's business.
cameldrv 9y ago
You haven't been paying attention to what Uber's been doing. They started by charging flat fares on Pool, now they're charging flat fares for all rides. They're decoupling the price that the rider pays from what the driver gets. Pool makes this obfuscation easier, since the calculation is much more complex for rides that are partially shared. They do seem to be raising prices on riders without passing it on to drivers.
- objclxt 9y ago
  That's certainly true - things like Pool make it easier to obfuscate the cut Uber takes. But still, price rises don't just have a potential to alienate passengers, but drivers as well. If anything, drivers may well be more fickle than passengers, since someone who takes Uber once or twice a week has less to lose than someone driving for them 8 hours a day.
  - dismantlethesun 9y ago
    True but a 6% increase overboard is practically invisible. Will you notice if you pay $7.51 one day, and 7.96 the next day? What with all the surge pricing, route changes, time of day pricing, and other schemes Uber throws at you, you're lucky to get the same price day to day.
    - samastur 9y ago
      If they are so invisible not to matter, then why aren't they higher already? Why would Uber lose money if they didn't feel like they have to?
      - muse900 9y ago
        I think there is always the factor of other apps and e.g google maps making prices easily available for comparison etc. If Uber increases from $7.51 to $7.96 you might not see the difference in your head, but then if for example lyft is offering $7.80 for the same ride, whats more likely for you to choose? I think they'd be very careful with increasing prices and wait their competitors to increase prices first so they can follow up, or else they might run themselvs out of business.
devdevdev83 9y ago
You're absolutely right.
dexterdog 9y ago
And raising fares by 20% is going to reduce demand.
SkyMarshal 9y ago
Do Uber drivers even see the fair that is charged their passengers? If not, then it's not clear Uber can't keep most or all of a 6% price increase without losing drivers to Lyft.
- TheAdamist 9y ago
  they don't see the fare charged to the customer, but people have figured out the customer is charged a higher fare than the driver sees by comparing notes, there is a lawsuit about it currently. http://www.latimes.com/local/lanow/la-me-uber-drivers-lawsuit-20170429-story.html http://www.latimes.com/local/lanow/la-me-uber-drivers-lawsui...

encoderer 9y ago

</conjecture> Lyft just isn't a real competitor outside of major American cities right now. Go to a city without an international airport and see how many lyft drivers there are.

untog 9y ago
Oh, for sure. But being spread thinly over dozens of small markets isn't necessarily a better idea than concentrating on a few large ones.
- rtx 9y ago
  Counter example India, Lyft can now never come here. Soon it will be one of Uber's biggest market.
  - zda 9y ago
    Why not?
    - rtx 9y ago
      We had a local competitior backed by soft bank. They are in bad shape. All because of execution. I don't see any other company able to match that ruthlessness.
      - marcosdumay 9y ago
        So, Uber will be able to take the entire market as long as they don't make it lucrative? That seems to be Uber's plan everywhere, and they look quite successful at it.
  - vr3690 9y ago
    Ola seems to be doing fine and I think they've some sort of partnership with lyft where at some point in time you'll be able to use the lyft app and hail ola rides. This hasn't happened yet, though.
beager 9y ago
I believe that Lyft doesn't have to compete globally with Uber to be a successful business in its own right. I also believe that Uber isn't immune from being crippled by competitors that operate in a very small but key subset of Uber's markets. There is very little network effect with Uber. Sure, you can hop off a plane anywhere in the world and open Uber to get a car, but that is a very small number of people overall. I would contend that most people use whichever ride-sharing service is available and most economical in their own city, and if that same service is available on the rare occasion that they travel, then bonus. Of course, if Uber beats everyone else to the punch with proprietary self-driving cars and undercuts prices profitably, they win. There seem to be some very large issues with that, however.
- jpatokal 9y ago
  You're ignoring that businessmen who travel all the time are very heavy users of Uber and similar services. I'm not even a frequent flyer, but I'd estimate that a good 80-90% of my Uber usage is travel-related. At home, I have tons of other options to get around, but on a tight schedule in an unfamiliar city, I basically default to Uber all the time, because I rarely have the time or risk tolerance explore alternatives. One of the things I love about Uber is that I can use it in SF, Singapore, Manila, Helsinki, wherever. It also works sufficiently well that I have near-zero incentive to try out Lyft/Grab/Ola/whatever, particularly since this usually involves yet another tedious sign-up process of entering credit cards and PIN confirmations and yadda yadda.
  - Bakary 9y ago
    I think their point was that well-off people who travel all the time are still a tiny portion of the population.
    - jpatokal 9y ago
      Sure, but that tiny portion still supports the bulk of the airline and hotel industry, and (I suspect) a very disproportionate share of Uber's business.

cameldrv 9y ago

You haven't been paying attention to what Uber's been doing. They started by charging flat fares on Pool, now they're charging flat fares for all rides. They're decoupling the price that the rider pays from what the driver gets. Pool makes this obfuscation easier, since the calculation is much more complex for rides that are partially shared. They do seem to be raising prices on riders without passing it on to drivers.

objclxt 9y ago
That's certainly true - things like Pool make it easier to obfuscate the cut Uber takes. But still, price rises don't just have a potential to alienate passengers, but drivers as well. If anything, drivers may well be more fickle than passengers, since someone who takes Uber once or twice a week has less to lose than someone driving for them 8 hours a day.
- dismantlethesun 9y ago
  True but a 6% increase overboard is practically invisible. Will you notice if you pay $7.51 one day, and 7.96 the next day? What with all the surge pricing, route changes, time of day pricing, and other schemes Uber throws at you, you're lucky to get the same price day to day.
  - samastur 9y ago
    If they are so invisible not to matter, then why aren't they higher already? Why would Uber lose money if they didn't feel like they have to?
    - muse900 9y ago
      I think there is always the factor of other apps and e.g google maps making prices easily available for comparison etc. If Uber increases from $7.51 to $7.96 you might not see the difference in your head, but then if for example lyft is offering $7.80 for the same ride, whats more likely for you to choose? I think they'd be very careful with increasing prices and wait their competitors to increase prices first so they can follow up, or else they might run themselvs out of business.

devdevdev83 9y ago

You're absolutely right.

dexterdog 9y ago

And raising fares by 20% is going to reduce demand.

SkyMarshal 9y ago

Do Uber drivers even see the fair that is charged their passengers? If not, then it's not clear Uber can't keep most or all of a 6% price increase without losing drivers to Lyft.

TheAdamist 9y ago
they don't see the fare charged to the customer, but people have figured out the customer is charged a higher fare than the driver sees by comparing notes, there is a lawsuit about it currently. http://www.latimes.com/local/lanow/la-me-uber-drivers-lawsuit-20170429-story.html http://www.latimes.com/local/lanow/la-me-uber-drivers-lawsui...