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Ultimately, these services compete with taxies, public transit, driving a car, getting a hotel and picking up your own pizza. If they are not competitive with a
by dougmwne 5y ago
Ultimately, these services compete with taxies, public transit, driving a car, getting a hotel and picking up your own pizza. If they are not competitive with alternatives, they won't be trillion dollar companies and won't justify their stock prices. There is an optimum price if the sharing economy companies want to be everyday conveniences instead of occasional luxuries.
- ghaff 5y ago>optimum price But there is no guarantee that a revenue-maximizing price is actually above the cost to deliver the service. There are a ton of personal services that US middle class people would like but aren't willing/able to pay what it costs. In the case of Uber specifically, I'm not sure why the price wouldn't settle somewhere around the price of taxis, given that's what they effectively are and which aren't a high margin business.
- dougmwne 5y agoCalling Ubers taxis seems a bit off to me. They are both transportation, but really not the same service. Have you ever tried to hail a cab while stuck on a street corner for 30 minutes? Ever tried to phone for a cab just to wait an hour? Ever see a line of cabs at a taxi stop just waiting for customers when there are no customers in sight? The app and algorithms provide enough optimization that the cars are exactly where they need to be to prevent drivers and passengers from waiting too long. That changes the cost to deliver the service (as does using private vehicles instead of fleet vehicle, though that may be more of an externalization than a reduction). As you say, taxies are low margin businesses. If Ubers manage to have even lower expenses than taxies, they choose to continue charging less. Uber has always gotten a nonlinear amount of increased business as a result of its lower price.