8 ms·
We'll see what you think of the cab industry when uber raises their prices by 3 times in order to become profitable, after the cabbies all gone.
by bitJericho 9y ago
We'll see what you think of the cab industry when uber raises their prices by 3 times in order to become profitable, after the cabbies all gone.
- brianwawok 9y agoAs long as Lyft is around, they can't.
- incongruity 9y agoYou're right. There are no markets in which a few dominant players capture significant profits because there are only a few dominant players who exploit barriers to entry or network effects to stay on top... Except pharma, telecom, energy, airlines and one or two others...
- cortesoft 9y agoOther than pharma, you just mentioned 3 industries that have very low margins. They aren't making a ton of money on their monopolies.
- brianwawok 9y agoIndeed I think he proved my point. I am not sure who would like taxi industry to pharma?
- TheLongerCon 9y agoThe barriers to entry with ride sharing are absurdly lower than anything else on that list. The network effect is pretty weak, because it doesn't cost consumers/drive more time or energy to keep multiple apps on their phone.
- linkregister 9y agoI'm pretty sure Lyft, which is just about as good as Uber for taking ordinary trips, will moderate that. Lyft isn't going anywhere; their cash reserves are large. Also public transit, car rentals, etc.
- imron 9y agoPublic transit and car rentals are a poor substitute for a taxi service.
- ghaff 9y agoI must be weird. I travel over 100 days a year. I do a lot of walking, sometimes rent cars, take public transportation, etc. I take taxis etc. relatively rarely.
- imron 9y agoEach of those options is perfectly fine for transportation if you planned and or intended to use them, what I mean is that whenever I've used a taxi or taxi-like service, car rental and/or public transportation would not have been a valid substitute or even possible. Car rental because you have to pick up the car and later drop it off and the costs are significantly higher than a taxi, and public transportation because it's slower, more crowded (therefore more difficult with luggage) and doesn't always go directly where you want to go. On a city-wide scale you can't expect car rentals and public transportation to be a valid replacement for a taxi/taxi-like service.
- kolinko 9y agoHave you been to Europe? I live in Poland and use public transportation as much as Uber - being able to afford both just as easily.
- imron 9y agoI have lived in Europe, although not Poland, but my point is not that public transportation is not useful, just that it's not always a suitable replacement for a taxi.
- smileysteve 9y agoTaxi service and rental cars are a poor substitute for public transit. I love that I live in one of the few cities with a train that leaves directly from the airport.
- brazzy 9y agoThat's the thing - without the artificial entry barriers like medallions, if they do that then a competitor like Lyft can show up and undercut them very quickly.
- abalashov 9y agoWell. Sort of. I wouldn't underestimate the complexity of all the logistics and automation required to deliver this consistently, reliably, and at a large scale, not to mention network effects, market saturation, getting to critical mass, etc.
- criddell 9y agoIt's not getting any harder though.
- TulliusCicero 9y agoYeah, and I bet after Borders shuts down, you'll see Amazon raise book prices sky-high! People always claim this will happen, and it never seems to. If Uber tripled prices, a competitor would start up to cut into their market share.
- bitJericho 9y agoVCs wont pay for rides forever.
- Paul-ish 9y agoTrue, but in cities with medallions supply was effectively restricted which probably had an influence on prices. That probably wont happen under a rideshare system.
- tw04 9y agoVCs are just paying for rides until self-driving cars get to the point that drivers are no longer needed. I'm not concerned with the price of rides increasing, I'm concerned with the unemployment our country is going to get punched in the face with. Between cab drivers and OTR (truckers), we're going to have a MUCH bigger problem on our hands than we've seen since Detroit collapsed (which was arguably less of an issue since it occurred over a longer period of time).
- sundaeofshock 9y agoVCs are needed until a self-driving car can pick an elderly passenger at the airport and help them with their baggage when they get home. Uber will run out of money long before we have self-driving cars.
- taxicabjesus 9y ago> VCs are needed until a self-driving car can pick an elderly passenger at the airport and help them with their baggage when they get home. This is a very good point. Also consider that many more people need help with groceries than with luggage.
- weberc2 9y agoI live in Chicago; I rarely use Uber. Mostly Lyft. Works just as well and less embroiled in ethical faux pas.
- furioussloth 9y agoSame applies for Lyft. The rides are cheap because of VC money. It is a good thing to have competition to keep the prices in check.
- weberc2 9y agoThe original comment referred to price gouging due to lack of competition. VC money might subsidize the rides (or more likely find ongoing development?), but Uber and Lyft are bound to be cheaper than taxis for as long as they can remain less entangled with governments (less artificial price inflation).
- clock_tower 9y agoThe problem is that Uber loses money on every ride, so they'll have to raise their rates as soon as they stop being subsidized by VCs -- unless they have self-driving taxis by then.
- PacketPaul 9y agoHow are they losing money on each ride? They are not managing fleets of cars, employees, etc. It's an app.
- xigency 9y agoThat is exactly the question you should be asking, thank you. Answer is they provide great rates for passengers - see all of the anecdotal evidence here - and great pay for drivers. It literally is "too good to be true." It's just an app--with a $20B valuation and about as much in free cash.
- 9y ago
- Shorel 9y agoThen a dozen smaller companies will pop up with similar services and cheaper prices. The genie is out of the bottle.
- shitgoose 9y agounreasonable profits should be protected by medallions. if uber does not come up with medallion system that is enforced and protected by elected officials, their rate hike will be a fart in a wind.
- PacketPaul 9y agoHow are these guys not profitable? It is basically an app that gets paid to match riders with rides. My guess is they are spending a lot of money expanding. Once done, they will be instantly profitable.
- InitialLastName 9y agoThey subsidize their drivers to keep their prices artificially low. It helps them out-compete the folks who have to turn a profit.
- op00to 9y agoAt that point, I'll enter the market and only charge 2x taxi fares, and undercut Uber. I'll be a millionaire!