12 ms·
Uber and lyft are both on the way down. The price at which they need to operate to be profitable is not a price that most americans are ready to pay. As simple
by rainyMammoth 7y ago
Uber and lyft are both on the way down. The price at which they need to operate to be profitable is not a price that most americans are ready to pay. As simple as that.
For now they delay this reality by subsidizing rides in order to generate business. In some cities like San Francisco, most incentives were removed and among my friends we all stopped using Uber (unless we really have to). It simply became way too expensive.
(Comment that I already issued yesterday on a similar thread)
- dman 7y agoCould you elaborate how much were fares before they removed subsidies and after?
- bluetidepro 7y agoI can't speak to SF, but here in Chicago, they have been gradually getting higher each year. I have consistently taken an Uber to work every morning for about 5 years now, and I used to pay $5-7 for the ride, but now it is $9-12. I will say though, the huge benefit now is their rewards have a "price protection" [1] for some tiers that allow for a cap on that ride price, so I think it can no longer go above $10.99 or something. That has helped a ton from it getting higher. But that's only available for some of the higher tiers in their rewards program, I believe. [1] https://help.uber.com/riders/article/price-protection-on-a-route-benefit-details?nodeId=8137f096-80bd-470a-9e4a-f4c8cfc57b70 https://help.uber.com/riders/article/price-protection-on-a-r...
- izzydata 7y agoThat seems more expensive than owning a car. Assuming 5 workdays a week and 2 rides per day then that is 40 rides a month on average which could be anywhere from $360 to $480 a month.
- bluetidepro 7y agoYou also have to factor in gas, renting a parking space for the car at home AND at work, taxes, insurance, convenience, etc. It's one of those things like renting. Yeah, in the long run, purely financially, buying would probably be cheaper, but a lot more factors go into it in real life that doesn't make it as black and white. For me, not owning a car is still much better overall, currently. Also, as I mentioned in another comment, it's just rides to work in the morning. I take public transportation home after work.
- deleted 7y ago[deleted]
- BeetleB 7y agoI'll bite. I keep track of all my numbers. For the 86 months I had my last car, I paid an average of $236/mo. This includes purchase price (subtracting out the amount I sold it for). Insurance. Taxes/fees. Gas. Auto insurance. Repairs and maintenance. Silly things like car washes. Of course, I didn't buy a brand new car, or even a recent car. And bought a reliable brand so repairs were low. My insurance was not just liability. All apartments I lived in had parking, as did my work. The types of apartments that have expensive parking are the type that have high rents anyway, so I save in both by not living there. Excluded is the gas for road trips, but I think that's fair as I doubt you used Lyft/Uber for road trips. So for less than what you're paying a month, I got to have a car, and got to drive anywhere I wanted to - not just work.
- matchbok 7y agoI think most people would gladly pay a bit more to not have to deal with the annoyance of owning a vehicle. Parking in most cities is pain. Driving to restaurants or bars is a no-go with your own vehicle. The flexibility you lose with having to own a car is simply not worth it.
- kcanini 7y agoCounterpoint: I think most people would gladly pay a bit more to not have to deal with the annoyance of only being able to use strangers' cars, of variable cleanliness, only after waiting several minutes for them to show up, and not being able to store anything in them during multi-stop trips.
- mjparrott 7y agoHow much is the total cost of owning a car in Chicago? Including gas, parking, insurance, maintenance and consumables, depreciation/lease, etc?
- chiefgeek 7y agoA lot. I live just outside the city limit. 2015 VW Golf Wagon. Payment is only $260/month because I bought it used, got a decent amount for my trade in, and put extra down. Insurance $100/month. Gas, tolls, taxes, misc parking $200/month. Parking at my apartment is included in lease but can easily be $200-400 depending on where in the city you are. I'm a freelancer. As such I don't pay for monthly parking in the city, which could be another $200-400.
- dsfyu404ed 7y agoAnd how many trips do you take with your car (so we can calculate the cost for replacing it with an Uber)?
- mjparrott 7y agoSo $860 or so per month to own a car. “Included in your lease” doesn’t mean you don’t pay for it by the way.
- sumeetjain 7y agoThe economics can be interesting. For me to own a car means I have to pay $300/month anyways, just to be able to park it in my apartment building. After considering the cost of ownership (insurance, maintenance, gas, etc), I decided it wasn't worth it.
- iamatworknow 7y agoYou can get a lease on something like a Toyota Corolla with no money down and ~$250 per month. That plus gas plus maybe having to pay for a parking space would probably break even, if not save a little money. Not to mention any rides that aren't part of the commute.
- Kye 7y agoDon't forget insurance, maintenance, tag, and other fees associated with owning a car.
- dylan604 7y agoLike the occasional overzealous towing that seems to happen
- iamatworknow 7y agoFor what it's worth Toyota leases come with 2 years of maintenance included, and unless you have major trouble, that last year might be an oil change or two costing ~$100 at the dealership (less if you go elsewhere). Admittedly, insurance can be pricy depending on where you are. Registration/tag fees can vary quite a bit depending on what state you're in.
- georgeecollins 7y agoInexpensive leases often come with limits on mileage that make the cars more expensive to lease if you drive over the limit.
- iamatworknow 7y agoThe two leases I've had were 12k miles/year (or 36k for the term of the lease). I work from home now but I used used to live 10 miles away from my job, and still turned in my vehicle at the end of my first lease with like 10k miles to spare.
- cybersol 7y agoParking spaces at both at home and work can easily be more than that in a major city. That is more limiting than even the car costs.
- semi-extrinsic 7y agoI dare say, if you live and work in a major city, close enough to the centre that you don't have a parking space, you ought to have great access to public transport. Unless you're in the US, I suppose.
- dougmwne 7y agoUsing Edmunds' True Cost to Own calculator, A 2014 Honda Civic would cost about 5k per year or $416/Mo. If you don't get free parking at work or home or if you have to pay tolls, that cost could increase significantly. A parking spot at a condo could rent for $200-$400/Mo. Parking downtown could be $12-$20 per day. That daily Uber ride sounds like a deal.
- vkou 7y ago> That daily Uber ride sounds like a deal. ... for someone living in a bubble completely disconnected from the planet Earth, where they think that a $400/mo parking spot is 'normal'. Sure, there's a few million people like you out there. Not enough to make Uber break even, though.
- dougmwne 7y agoBut we're talking about Chicago and this is the very center of normal. There are in fact millions of people who work in the central business districts of the world's most expensive cities. Uber has 75 million riders. If they could actually convince some fraction of those millions of high income urbanites to only use Uber for their transit needs that would yield a disproportionate share of their revenue. It's great that you get free parking, but have you considered that you're living in a bubble too? 6 out of 7 people globally don't even own cars!
- vkou 7y agoI don't have free parking, I pay $150/month for it. But I'm also a wealthy techie who happens to live within spitting distance of a booming downtown. 90% of the people living in my metro area (Seattle) do not pay $150/month for parking (And I'd wager that 99.9% do not pay $400/month for parking). ... And most of those people have commutes of >4 miles. The problem with taxis is that you pay by the mile. You'd be an idiot to drive yourself to work, if you live 2 miles from work, and have to pay through the nose for parking. You'd be an idiot not to drive yourself to work, if you live 15 miles from work, your bus system sucks, and your parking is cheap or free. [1] Doing 15 miles/day in a taxi costs nearly 3x that of doing 5 miles/day in a taxi. Doing 15 miles/day in a car is pocket change, compared to doing 5 miles/day in a car (Or 0 miles/day). Most of your costs with a car are fixed. Most of your costs with a taxi are distance-based. [1] And if we're going to get into a discussion about how the world should value the cost of parking spaces, I will happily point out that what we should have is good bus services, not private chauffeurs.
- bumby 7y agoAs someone who used to work in a major city but now doesn't I think the ride share model makes much more sense in urban areas where you have more obtrusive costs like parking.
- Daishiman 7y agoBut then you have to own the car, which for someone like me who would barely use it aside from an occasional weekend ride just makes little sense as far as the additional concerns of paying insurance, servicing, finding parking space and so on.
- dsfyu404ed 7y agoOutside certain places with very high car ownership uber is tons more expensive.
- deleted 7y ago[deleted]
- mjparrott 7y agoSame experience here, also in Chicago. I take the bus now it’s much cheaper.
- bluetidepro 7y agoYeah, I take the bus/CTA home everyday, but still love my morning Uber rides. Haha Just so much easier, and I hate being all hot and sweaty from the bus or CTA when I get to work in the morning. ¯\_(ツ)_/¯
- rainyMammoth 7y agoI used to take Uber pools at around 4-5$ in San Francisco. Now it rarely is below 10$, which is too expensive for a service that is essentially very slow. Most of the time I go faster by walking or taking one of those electrical scooters.
- acchow 7y agoI remember 3 years ago all my pools and lines in SF were $2.50. Now it is usually $6-7. I think these companies have changed our habits.
- pjc50 7y agoOver what distance, may I ask?
- lhorie 7y agoI do ocean beach (richmond) to fidi (~7 miles) and vice-versa at rush hours and it's usually around $7-10. Up from $5-8 a few months ago. Getting out of fidi at 5pm can sometimes be slow w/ pool (20+ min wait), especially if the driver gets stuck in traffic e.g. on bush leading to market because of some rando accident on 101. Taking an uber at any other time or location has mostly been fine for me (5 min wait times tops), and it's not that uncommon to have 5 min wait times even out of fidi at 5pm.
- ikeyany 7y agoWhen they first started out in my city they offered a ride pass that put a hard limit on rides less than 20 miles at $4. Yes, $4 for anywhere within 20 miles. Then it was changed to $5. Then it was changed to $6, or instead you could UberPool for $2. Then they added a 2 minute waiting period for an UberPool. They then also changed the flat fare altogether and instead your ride pass came with something like 50% off all rides, with a maximum $6 discount. It's obvious what would happen. At least my friends and I got it while the getting was good.
- alkonaut 7y agoWow I had no idea it was that low. No wonder people wants that product. Here a uber ride is the same price as taxi (because it is taxi) so 15 minutes is easily $50.
- deleted 7y ago[deleted]
- Finbarr 7y agoI used to commute from San Mateo to San Francisco on Uber Pool for ~$10 each way. Same service is >$20 now.
- ttul 7y agoThat’s a distance of 32km. Assuming a fully loaded $0.50 per km cost to operate a private vehicle, the cost should be $16.00 each way assuming that you are the driver. By charging $4.00 more than the cost, you’re freeing yourself up to do other things during that time. Is your time really not worth $4.00?
- refurb 7y agoFully loaded cost is assumed to be $0.55 (or something close) by the IRS. That's $0.33 per km or $10.56 for his trip, saving $10 (or $20 return) each day.
- ttul 7y agoLoL it’s $0.50 in Canada, but I forgot to do the currency conversion. Touché.
- Finbarr 7y agoTime is definitely extremely valuable, which is why I don’t commute anymore.
- refurb 7y agoIt used to be easy to get a Lyft/Uber for $30 from SF to SFO (10 miles). A cab would never be less than $50 (both including tip). I took a Lyft a month ago during peak times and it was $40, so it's still significantly cheaper for me.
- deleted 7y ago[deleted]
- burtonator 7y agoI really hope they both implode. The blitzscaling strategy might in fact work but it would effectively be an end to democracy. We would basically have a marketplace of ALL monopolies. It just doesn't scale.
- mlindner 7y agoBlitzscaling doesn't let you produce monopolies unless you have someone constantly bankrolling the beating down of competitors. As soon as Uber runs out of other people's money then the issue stops. The fact that Lyft exists shows that they can't monopolize.
- catacombs 7y ago> among my friends we all stopped using Uber (unless we really have to). It simply became way too expensive. What's been the alternative? Regular taxis? Aren't they just as expensive?
- rainyMammoth 7y agoLet me ask you the question in another way. What did you do before Uber? Why do you see it as an essential service now? To answer your question: I bike, use my car or use electrical scooters. I still use Uber but when I really have to (maybe once every two weeks)
- ivalm 7y agoYour own car? If I go somewhere where it's a pain to park occasionally I will use Uber instead. Similarly, if I go out I could make a choice of being very conscientious about how much I drink (and thus drive) or take an uber and not worry about being too buzzed.
- deleted 7y ago[deleted]
- asdfman123 7y agoIn my city the alternative is designated drivers. Uber is what you take when you want to get drunk.
- toasterlovin 7y agoThere’s a reason nobody cares about the taxi industry before ride sharing: it was small because it was too expensive for most people to use outside of special circumstances.
- bsder 7y agoI disagree. Expense was never really an issue for me. My issue was always summoning the taxi. I was generally operating in secondary markets like Las Vegas off-strip, San Diego, or Pittsburgh. You couldn't schedule your trip to the airport because you never knew when the stupid taxi would show up. While I hate many things about Uber/Lyft/ridesharing, they changed the customer service expectation of the whole field. Even if the prices go back to taxi levels, that's a massive improvement.
- standardUser 7y agoThe difference between taxi fares and Uber/Lyft fares has all but vanished. People were willing to pay taxi rates all along, now they are doing so and getting what is arguably a much better service.
- toomuchtodo 7y ago> now they are doing so and getting what is arguably a much better service. Only until Uber and Lyft run out of cash (a few more quarters based on cash on hand), at which point taxi fares will rise to properly reflect the actual cost of the service. People will choose a combination of walking, public transit, traditional cab companies, and perhaps an e-scooter and/or bicycle. We lived before Uber and Lyft, we'll live after them. Fun experiment while it lasted.
- beeneuf 7y agoAfter my experiences having grown up with cabs, I am honestly willing to pay a significant premium to use Uber and Lyft. It is not an understatement to say that I hate traditional taxis. I hate the terrible service. I hate having them refuse fares based on where I'm going. I hate calling to schedule a pickup in advance and the driver just not bothering to show up. I hate being pressured to pay in cash instead of credit card and having them berate and insult me when I insist on card. I hate having to be on alert to see if they're taking a deliberately longer route or running up the meter. I hate the verbal and sexual harassment they have doled out to me and my friends with no consequences, because there is absolutely nothing in their business model that provides them any incentive to treat their customers with courtesy and respect. I want to see taxis crash and burn, I want to see them fail, I want to see them removed from my experience on this earth. I don't think I'm alone in that, and I will continue to use Uber and Lyft and pay far more than taxis because they provide an exceptionally better service. Also Uber Pool/Lyft Line are brilliant and taxis will never bother to replicate that kind of efficiency.
- toomuchtodo 7y agoWith all due respect (I can appreciate paying more for quality, I do so myself!), there are not enough of you to justify rideshare valuations (which are based on taking over the world, not being a boutique transportation network for the discerning mobility user).
- jonknee 7y agoI think it's more the massive amount of spending they do with little to nothing to show for it. They spent $457m last year on autonomous and flying cars with $0 in revenue from those projects. Maybe that will work out, but I bet every penny was ultimately wasted. Not spending billions a year on R&D certainly makes the financials look nicer. It might not attract as nice of a multiple, but it's not the ride prices that are out of whack at Uber IMO.
- kn0where 7y agoOn the other hand, they spent $0.5 billion on R&D in a year, and lost $5 billion in a quarter, so I don’t think the R&D is nearly as significant an issue as subsidizing rides.
- kgwgk 7y agoThey booked an expense of $3.1bn in R&D last quarter. Even excluding the $2.6bn linked to stock-based compensation it’s $0.5bn per quarter. But of course that includes useful R&D and not just the flying-cars kind.
- paxys 7y ago"R&D" usually includes all engineering expenses on financial reports, which for a company like Uber is the vast majority of operating expenses.
- jonknee 7y agoBut in this case they clearly don't: Operations and support ($864m), Sales and marketing ($1.2b), General and administrative ($1.6b). They have bloated costs all over. Easy to do when you're the hottest VC backed company around, but the clock is ticking and they'll probably trim a lot of fat.
- paxys 7y agoYeah my point was people shouldn't look at it and think "self driving car research". Every engineer at Uber is paid out of that budget.
- themagician 7y agoThe service also turned to total shit. I took my first Uber in 2011. It was amazing. Expensive, to be sure, but the service was amazing. Black Sedan, extremely professional, shows up wherever you want, drops you off wherever you want, never really had to look at GPS. Just amazing. It was so good I figured I'd never need car again. But it was expensive, so I used it sparingly. I'd take public transit or walk most of the time, but when I needed to get somewhere that didn't go or I needed to get somewhere fast, Uber was there. Now it's a joke. A total joke. The service is shit. The base tier has people picking you up in minivans that rattle like they are about to fall apart and the people can barely drive… if they pick you up at all. There's like a 50/50 chance it will take 15 minutes for a pickup because the driver will go in the completely wrong direction and then cancel the ride. The "premium" service tiers come with fancier cars, but most driver still have no idea where they are going. It was good when it was small. It was good when they only had professional drivers with carrier passenger permits and commercial insurance. It made sense. It was good for everyone. It was good when they actually had "drivers", not random people struggling to make minimum wage. I also try to avoid it.
- darkwizard42 7y ago...Uber when it first started was a Black Car service... you can still call a black car service and it will be a certified livery driver. There are also still plenty of black car services around if you are concerned about loss of quality in more affordable offerings (where did you think the tradeoff was going to be for a more affordable solution? Purely scale?)
- themagician 7y agoYou can still choose a black sedan, but that doesn't mean anything. It's just a random guy with a more expensive car. I didn't think there was going to be a tradeoff. There was never supposed to be. The idea that random people would drive others around was never part of Uber's business plan, that's why it was called "Uber" to begin with. It was never part of anyone's business plan—it was illegal. Lyft came along and just started hiring random people with no passenger carrier permit and no insurance, and then Uber had to compete with that nonsense and that nonsense somehow just became legal because "it's an app" was a valid defense and the CPUC went along with it because it became too big to ignore or outright ban.
- aresant 7y agoTo qualify your comment: The line item in Uber's results you want to look at here is "Excess Driver Incentives" which covers: "Cumulative payments to a Driver could exceed cumulative revenue from a Driver as a result of Driver incentives or when the amount paid to a Driver for a Trip exceeds the fare charged to the consumer." What's really interesting here is that year over year this number went down substantially ($21m total) for their "Ridesharing" eg their core platform is subsidizing substantially fewer rides today as a percentage of overall revenue than it was a year ago. But that total "Excess Driver Incentives" line item exploded upwards from $221,000,000 to $544,000,000 for just their uber eats platform! That means that your rides were somewhat subsidized and getting better, but your hamburger's ride was subsidized to the tune of a half billion dollars :) And further qualifying this the Uber Eats business unit doubled in revenue but the incentives grew at an even faster rate. https://investor.uber.com/news-events/news/press-release-details/2019/Uber-Reports-Second-Quarter-2019-Results/default.aspx https://investor.uber.com/news-events/news/press-release-det...
- nugget 7y agoOne of the big outstanding macro questions is how these businesses perform in a recession. If (or when) an inevitable contraction occurs, how quick are millennials to trade a daily uber eats habit for weekly groceries and meal prep at home.
- avocado4 7y agoSo what do you use instead of Lyft/Uber in SF? BART / Mini doesn't go everywhere.
- aiddun 7y agoSame thing happened with Via in NYC. They used to offer $5 flat rides to anywhere in Manhattan, now prices for the most part are variable and sometimes much more. It was unfortunately too good to be true. They offer a subscription pass that can use pre-tax dollars but for me personally it's not the same.
- randyrand 7y agopromotional pricing in the beginning is a very common technique to increase market share. This is particularly important for industries with large network effects like ridesharing.
- pbreit 7y agoTo figure out Uber's core business economics look at Lyft's Contribution Margin which rose to 46%. Uber's, which includes a lot more immature markets, went back positive to around 9%. ie, core business prints money.
- rreichman 7y agoWhat’s the alternative? Owning a car? Walking? The terrible transit?
- randyrand 7y agoit’s pretty damn cheap still though in SF. I think Uber will be just fine.
- mav3rick 7y agoMost cities in the US have terrible public transport. Also, people like to Uber back after a night out.