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Right now, Uber keeps 22 cents on each dollar paid by passengers, as its fee for creating the app, keeping it working, etc. That's cheap relative to the iTunes
by GCA10 7y ago
Right now, Uber keeps 22 cents on each dollar paid by passengers, as its fee for creating the app, keeping it working, etc. That's cheap relative to the iTunes store, which keeps 30%. It's preposterous compared to the 3% that real-estate agents get for buying or selling a home.
We really don't know what the "fair" rate is for running a ride-hailing business. We know what's been collected to date in a venture-funded duopoly with limited public disclosure.
But my guess is that 22% is not the long-term equilibrium. Lots of outside pressures (regulators; new competitors) could drive Uber's share down. It's hard to see any forces that would cause it to expand.
- jethro_tell 7y agoAutonomous cars and owning their fleet or leasing from large fleet companies is probably the end goal for increasing the share. I don't see this going any other way. These have always been a play on getting market share at a loss while the tech is being built and converting to a profitable position when there are no contractors to pay.
- Barrin92 7y agoI don't understand this autonomy angle for several reasons. One is of course that legally (and technically) full autonomy is a long, long time away so we'll still have drivers in cars that want to be paid, but more importantly, Uber doesn't even own autonomous cars. Are they really, in addition to all their other costs, going to stock up on millions of expensive autonomous vehicles? That's unrealistic. And if they don't, what stops for example peer-to-peer solutions to emerge that let's people rent out their cars directly? It's very possible we don't need a middleman here when autonomy is ready. I'm usually sceptical of all the decentralised, smart-contract stuff, but renting your car to some agreed upon destination or for some time through a open-source free application sounds actually doable.
- jacques_chester 7y agoThere's also the small problem of car manufacturers saying "Oh yeah, that's a great business model. Yoink." People talk about being "a Ford family". "This is a Chevy household". They cheer on their favourite brand in races. I don't hear much in the way of "we bleed Uber blood".
- Barrin92 7y agoYes, that's a good point. Car companies could gobble up a tech startup or even social networks could try to leverage their userbase to connect people. A company like Uber really only has a better relationship to the drivers, which is precisely who they're trying to get rid off.
- freewilly1040 7y agoWhere is the comparison to real estate agents coming from?
- GCA10 7y agoI'm sampling the world of commission-based connectors in a deliberately wide-ranging way. We could also include Hollywood agents (often 10%; sometimes 15% or even 20%). Or Eventbrite, where the base formula of 3.5% +$1.79 translates into an overall 14%. (I'm using an average ticket price of $17, which was correct in 2014.) No comparison to other businesses is exact, but the basic point is that if we make the rounds of commissions charged throughout the economy, not many fields have settled out at the above-20% level that Uber is currently defending.
- freewilly1040 7y agoThe idea makes sense but I think you need to exclude rare big ticket transfers like real estate. The Eventbrite comparison honestly makes 22% sound reasonable. Uber does a lot that Eventbrite doesn't do: - Make the market (you don't go to Eventbrite to find an event to go to, you find an event you want to go to and get routed through Eventbrite) - Provide a form of ID verification on both buyer and seller - Resolve disputes (Eventbrite probably does something like this at much lower volume). - Navigate the regulatory environment. - Provide real time assistance throughout the transaction (ie navigation for both buyer and seller) Not to mention, event at that 14% Eventbrite stock is down nearly 50% on the year.
- luckydata 7y agoRE agents get a lot more than that.
- gradys 7y agoMy dad is a real estate agent (primarily for residential properties), and at least when I was growing up, it was 3% each for the buyer and seller's agent.
- astrodust 7y ago22% is really high for what's effectively a dispatch fee. If you factor in the way Uber can dictate price, you may actually be "paying" a higher fee versus what you could've made on your own. If they force you to accept a 40% discount that's got to be factored in, too. Apple takes 30% but they don't tell you what price you can charge.
- hellllllllooo 7y agoWould be very interested to see the economics if drivers could set their own pricing.
- foobiekr 7y agoI don’t think it would work. This works for AirBnB but for Uber you need ride flow in order to keep drivers on the road and riders bothering.
- jjeaff 7y agoWhile I think real estate agents get too much when it come to higher dollar properties, it doesn't compare well to Ubers service. A lot of Ubers cost is fixed, there is almost no marginal cost for each ride. A RE agent has to put in significant work for each commission they earn.
- airstrike 7y ago> A RE agent has to put in significant work for each commission they earn. I paid a broker $8k to rent an apartment I found online on my own. The landlord paid them another pile of cash, probably comparable to that. I'm not sure that constitutes "putting in significant work"
- MiscIdeaMaker99 7y agoEver bought or sold a house?