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It is a very competitive market. Customers are price-sensitive. I have many friends who open both Uber and Lyft and take whichever is cheaper. Right now, their
by nullnilvoid 9y ago
It is a very competitive market. Customers are price-sensitive. I have many friends who open both Uber and Lyft and take whichever is cheaper. Right now, their prices are very close. If Uber raises 6%, their revenue will drop in my area. Besides, if it is that easy to turn a profit, Uber would have done it a while ago. A profitable business is much easier to justify under the current circumstances.
- sib 9y ago>> Customers are price-sensitive [with varying levels of sensitivity for varying aspects of the service] That is the source of price elasticity of demand. Customers are not identical. Some people value convenience of only checking one app more than a small price difference. Some people value the speed of getting a car and if Uber can provide a car 3 minutes faster, may be willing to pay a few percent more. Some people prefer the UX of the Uber app and how fast it is to actually compute a trip / connect to a driver compared to Lyft. Some people are submitting expense reports and would prefer to have all their car service expenses from the same provider, for convenience. And some people don't. Just because Uber hasn't turned a profit (which they may have, in local areas, for all we know), doesn't mean they couldn't. It's completely rational for them to price low and attract more customers if they are more able to raise capital than their competitor in order to make it harder for their competitor to stay in business.