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In the same breath you complain that they don't pay their drivers enough and that their service is too expensive. Drivers aren't going to get more than a few p
by kemitche 8y ago
In the same breath you complain that they don't pay their drivers enough and that their service is too expensive.
Drivers aren't going to get more than a few percentage points increase without increasing the price to the end user.
- inferiorhuman 8y ago> Drivers aren't going to get more than a few percentage points increase without increasing the price to the end user. But they should. Perhaps the pay scale is too top heavy. Uber's operational expenses should be trivial (hell, they straight up stole the most expensive bits -- the self-driving car IP). Instead they squeeze the drivers (passing along rate cuts) and riders (surge pricing during shootings, etc) pretty severely.
- smt88 8y agoUber's driver and rider acquisition costs (marketing, promotions, ads, etc.) are astronomical. They can't easily scale these efforts back because the value of the service plummets for all parties if they lose their economy of scale.
- code_duck 8y agoWon't there be some point at which they're established and don't need to work so hard at those things?
- smt88 8y agoProbably not. Riders and drivers are both primarily price-driven. They have little or no brand loyalty. It's a low-margin, race-to-the-bottom type of business. L5 self-driving cars will be a game-changer for a while, assuming Uber gets exclusivity from Waymo (which now owns a stake in Uber).
- code_duck 8y agoIt seems to me that they are very well known at this point, and don't have significant competition. I don't see why they would be spending so much money for marketing... maybe in the past, maybe in the future. I must not understand the market. I'm sure there's plenty of analysis of this out there, so I should read some articles.
- inferiorhuman 8y ago> Uber's driver and rider acquisition costs (marketing, promotions, ads, etc.) are astronomical. Which is hilarious to me. Uber is spending a ton of money, and very little of it trickles down to the people that make Uber possible (the drivers).
- haldean 8y ago"we lose money on each sale but we make up for it in volume"
- mlthoughts2018 8y agoThis seems like a way of saying Uber does not actually have a possible business model. (Not saying I agree or disagree.)
- ellius 8y agoWhich many people have argued effectively. Izabella Kaminska has written the most interesting articles on that topic in my opinion.
- code_duck 8y ago"In the same breath you complain that they don't pay their drivers enough and that their service is too expensive." You seem to present that as a contradiction, but the obvious conclusion is that the GP believes Uber keeps an unfair share of the ride fees. Based on my vague internet research, it appears Uber keeps 20-25% plus various fees, like how credit card settlement charges work, which can add up to 40%+ for some rides.
- mlthoughts2018 8y agoAnd the amount Uber keeps has to go way up too, if Uber is to cease operating at multi-billon dollar per year losses to become profitable. Currently they only take 20-25% and the rest of the required income to meet operating expenses is subsidized by VC funding. And the losses are so large that it likely means both raising prices to riders and reducing the net payout to drivers at the same time.
- toomuchtodo 8y agoHence why Uber is unsustainable without VC dollars. As soon as driver pay goes down further and ride costs increase, their model falls over.