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Ask HN: If Uber is losing so much money, why not raise the price of fares?
In my city of Chicago the cost of an Uber is significantly cheaper than a traditional taxi. And Uber is losing money, supposedly a lot of money. So why not raise the price of fares, is Uber trying to condition commuters to choose ride sharing over a traditional taxis through lower fares? Do they just figure they can raise more money? Or are they biding their time because they believe they can have self-driving cars available before they run out of money?
- omosubi 8y ago1. they have to compete with lyft and a handful of other ride sharing companies such as VIA (though the effect of the smaller players is probably negligible at best). 2. They are trying to monopolize the market. if you can put all other players out of business you can set whatever price you want. The government doesn't seem too interested in upholding anti-trust laws and uber knows this. also, I think the effect of taxis is also moot at this point. they are so expensive and inconvenient relative to their rideshare alternatives that few people I know use them. 3. They would eventually like to have self-driving cars as the default, and will almost certainly be profitable once that happens. It seems like they have struggled with this recently though and are pushing back the "launch date" further and further.
- atmosx 8y agoUber's revenue in 2017 was 37B with losses to the tune of 4.5B, Daimler's revenue in 2017 was 167B and recorded about 10B net income. Lyft's revenue was 1B in 2017, also burning money. Math doesn't support Uber's or Lyft's case, but you never know.
- gpresot 8y agoOn point 3: The business model for self driving is still quite uncertain. Will they own the cars? if so, that's quite a substantial investment, and it will change completely the economics of the offer. If they rent them from Ford? then it will be interesting to watch which company will extract more value (profit) from this. Even at that stage, they will have competition from other autonomous drive systems (Waymo)
- paulcole 8y ago> 3. They would eventually like to have self-driving cars as the default, and will almost certainly be profitable once that happens. I would eventually like to win the lotttery and will almost certainly not have to worry about money once that happens. I don’t know if I’m the crazy one here, but I just can’t see this self-driving car end game coming inside of 10-20 years. And can Uber really drag their feet and remain solvent that long? And is it even certain that they’ll be the “winner” in a self-driving car world?
- cardimart 8y agoIt's called penetration pricing. Since it's a winner-take-all market - because of the network effects on both sides of the platform - they need to acquire users faster than any other competitor. They'll stop when they know they're the clear winners of the market.
- purplezooey 8y agoalso known as a "land grab"
- cjbprime 8y agoBecause then everyone will use Lyft instead.