15 ms·

What economies of scale? Their primary expenses, workers, are fixed cost.

by RL_Quine 4y ago

Jistern 4y ago
- aetherson 4y ago
  People care a lot more about timeliness for their hot food and their own person than they do for a box that UPS delivers. Uber has been trying to make that particular economy work for nearly a decade now, and it turns out it's niche.
- wwalexander 4y ago
  If that makes you weary, you should try explaining engineering to business people!
  - Jistern 4y ago
- kareemsabri 4y ago
  Engineer here. Despite your condescension it doesn't appear you understand economies of scale. Economies of scale means the cost goes down when volume goes up. An Uber driver can only drive one passenger at a time (put aside pool, which requires a price discount to get people to use it). So the number of drivers required to serve N passengers simultaneously is N. Costs scale linearly with rides per hour. UPS has economies of scale because one driver puts 500 packages in a single truck, so the driver's wage is fixed and the revenue increases with the number of packages in the truck.
  - Jistern 4y ago
    - kareemsabri 4y ago
      > That would be inane. You are basically arguing, "Get rid of your competitive advantage." Uber does ridesharing... badly. They have bad management. What? Uber Pool was never big, and I believe is now completed retired. Are you sure you know how Uber works? > An Uber (or Lyft) driver who is able to make an average five deliveries (whether it be people, food, or parcels is immaterial to this discussion) in 30 minutes versus an ordinary taxi cab driver who is able to make an average three deliveries in 30 minutes would be correctly said to enjoy economies of scale. This is not economies of scale. This is just more volume. It would be economies of scale if Uber paid their drivers hourly wages, so their cost per ride went down because they did more rides per hour. But they do not, they pay them a cut of the ride. > See, I made it simple enough so that even an engineer like you could understand it! I'd love to see your business.

What economies of scale? Their primary expenses, workers, are fixed cost.

Jistern 4y ago

aetherson 4y ago
People care a lot more about timeliness for their hot food and their own person than they do for a box that UPS delivers. Uber has been trying to make that particular economy work for nearly a decade now, and it turns out it's niche.
wwalexander 4y ago
If that makes you weary, you should try explaining engineering to business people!
- Jistern 4y ago
kareemsabri 4y ago
Engineer here. Despite your condescension it doesn't appear you understand economies of scale. Economies of scale means the cost goes down when volume goes up. An Uber driver can only drive one passenger at a time (put aside pool, which requires a price discount to get people to use it). So the number of drivers required to serve N passengers simultaneously is N. Costs scale linearly with rides per hour. UPS has economies of scale because one driver puts 500 packages in a single truck, so the driver's wage is fixed and the revenue increases with the number of packages in the truck.
- Jistern 4y ago
  - kareemsabri 4y ago
    > That would be inane. You are basically arguing, "Get rid of your competitive advantage." Uber does ridesharing... badly. They have bad management. What? Uber Pool was never big, and I believe is now completed retired. Are you sure you know how Uber works? > An Uber (or Lyft) driver who is able to make an average five deliveries (whether it be people, food, or parcels is immaterial to this discussion) in 30 minutes versus an ordinary taxi cab driver who is able to make an average three deliveries in 30 minutes would be correctly said to enjoy economies of scale. This is not economies of scale. This is just more volume. It would be economies of scale if Uber paid their drivers hourly wages, so their cost per ride went down because they did more rides per hour. But they do not, they pay them a cut of the ride. > See, I made it simple enough so that even an engineer like you could understand it! I'd love to see your business.