6 ms·

The rides are not really cheap. At best, in nyc, uber x is advertised to be cheaper than a taxi but that is really not always the case.

by dr_ 12y ago

toomuchtodo 12y ago
Forgive my terribly silly question then. If Uber is skirting the regulatory cost of a medallion for each vehicle in service, why is the cost the same as a taxi paying that expense?
- ProAm 12y ago
  > why is the cost the same as a taxi paying that expense Uber is trying to maximize their revenue
  - maxmcd 12y ago
    Why would they do that? They have competition, even if it doesn't seem so obvious right now, and a larger percentage of nyc's cab market share seems much more valuable. Especially if it's so easy for them to raise money.
    - jobposter1234 12y ago
      Can you really not think of reasons why they'd want to maximize revenue? Here are a few thoughts, off the top of my head: * room to drop prices at the right moment, when it would most affect competitors * more money in the bank means less pressure to raise money (before today; I'd guess this is the last big round they do). Less pressure means they can wait until they get a better deal for current stakeholders * they don't think price is the determining factor for market share. I'm seeing Uber and Lyft mutually differentiate corporate personality to avoid being commoditized for each other * people tend to judge safety / quality by price -- if they were 50% cheaper, people might be sketched out * maximizing revenue also maximizes money in their driver's pockets -- they need high quality, reliable drivers, and thus need to pay them decent wages. Those are just a few reasons why they would maximize revenue pre-VC money.
- deleted 12y ago
  [deleted]
  - smeyer 12y ago
    I don't remember the exact numbers, but I think renting a medallion for a year in New York is going to cost you several tens of thousands of dollars a year. With medallions costing 800k, it doesn't really matter whether you're renting by the shift or paying interest on a loan used to purchase the medallion, it's going to be a significant expense.
    - nerfhammer 12y ago
      It makes a huge difference whether you're renting the medallion or paying for a loan for it - only the person in the latter case will ultimately be able to sell the medallion back once they're done with it. The medallions are a perfect commodity and there's very little risk, and there are banks that specialize in loans for tax medallions, so the interest rates you can get for them is extremely low. Historically you'll very probably make more back on it than you ever paid for it.
      - smeyer 12y ago
        Googling found me rates of about 4%-5% for a taxi medallion loan in NYC[1]. For an 800k medallion, that's 30k-40k a year in interest, which should still be giving a lot of wiggle room to a competitor not paying for medallions. [1]https://www.brfcu.org/rates_loans.asp https://www.brfcu.org/rates_loans.asp
        nerfhammer 12y ago
        The most recent announced average rate at the largest medallion loan bank is 4.06%: http://www.medallionfinancial.com/news_release_14-11-03.htm http://www.medallionfinancial.com/news_release_14-11-03.htm The historical average appreciation rate of medallions is 14%: http://www.aei.org/publication/chart-of-the-day-nyc-taxi-medallion-prices/ http://www.aei.org/publication/chart-of-the-day-nyc-taxi-med... The differential between the loan rates and appreciation yields may be about as much as you make using it to actually drive the taxi: http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-medallions-cost-1-million/ http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-me...
- potatolicious 12y ago
  Because it turns out the medallion cost is only a small part of the operating cost of a cab. "TLC’s medallions held by fleet owners, who collect rent of up to $132 a shift from drivers"[1] NYC cabs run on 2 12-hour shifts a day. This works out to ~$13/hr to pay for the medallion itself. This isn't nothing, but ultimately the cost of the car, gas, insurance, etc, are still the dominant factors in operating a cab. So yeah, theoretically without the medallion cost Ubers can be cheaper than a regular taxi, but probably not by all that much. [1] http://www.thenewyorkworld.com/2014/01/20/taxi-medallions/ http://www.thenewyorkworld.com/2014/01/20/taxi-medallions/
- Nursie 12y ago
  Uber take quite a big cut don't they? It's why I find it hard to helieve they can out-compete in cities where there's already an open market (medallions seem to be a weird US thing?)
  - Thimothy 12y ago
    Nop, they are common in Europe too. Although most european countries have severily limited the operation of Uber, so...
look_lookatme 12y ago
UberX pricing feels comparable, on average, to Yellow/Green Cabs for me, in Brooklyn. Sometimes it might be more expensive, sometimes less, but it mostly around the same. I take Uber probably 5-8 times a week.
- pbreit 12y ago
  UberX is almost always less expensive than a taxi. Certain NYC trips might be an exception.

The rides are not really cheap. At best, in nyc, uber x is advertised to be cheaper than a taxi but that is really not always the case.

by dr_ 12y ago

The rides are not really cheap. At best, in nyc, uber x is advertised to be cheaper than a taxi but that is really not always the case.

toomuchtodo 12y ago

Forgive my terribly silly question then. If Uber is skirting the regulatory cost of a medallion for each vehicle in service, why is the cost the same as a taxi paying that expense?

ProAm 12y ago
> why is the cost the same as a taxi paying that expense Uber is trying to maximize their revenue
- maxmcd 12y ago
  Why would they do that? They have competition, even if it doesn't seem so obvious right now, and a larger percentage of nyc's cab market share seems much more valuable. Especially if it's so easy for them to raise money.
  - jobposter1234 12y ago
    Can you really not think of reasons why they'd want to maximize revenue? Here are a few thoughts, off the top of my head: * room to drop prices at the right moment, when it would most affect competitors * more money in the bank means less pressure to raise money (before today; I'd guess this is the last big round they do). Less pressure means they can wait until they get a better deal for current stakeholders * they don't think price is the determining factor for market share. I'm seeing Uber and Lyft mutually differentiate corporate personality to avoid being commoditized for each other * people tend to judge safety / quality by price -- if they were 50% cheaper, people might be sketched out * maximizing revenue also maximizes money in their driver's pockets -- they need high quality, reliable drivers, and thus need to pay them decent wages. Those are just a few reasons why they would maximize revenue pre-VC money.
deleted 12y ago
[deleted]
- smeyer 12y ago
  I don't remember the exact numbers, but I think renting a medallion for a year in New York is going to cost you several tens of thousands of dollars a year. With medallions costing 800k, it doesn't really matter whether you're renting by the shift or paying interest on a loan used to purchase the medallion, it's going to be a significant expense.
  - nerfhammer 12y ago
    It makes a huge difference whether you're renting the medallion or paying for a loan for it - only the person in the latter case will ultimately be able to sell the medallion back once they're done with it. The medallions are a perfect commodity and there's very little risk, and there are banks that specialize in loans for tax medallions, so the interest rates you can get for them is extremely low. Historically you'll very probably make more back on it than you ever paid for it.
    - smeyer 12y ago
      Googling found me rates of about 4%-5% for a taxi medallion loan in NYC[1]. For an 800k medallion, that's 30k-40k a year in interest, which should still be giving a lot of wiggle room to a competitor not paying for medallions. [1]https://www.brfcu.org/rates_loans.asp https://www.brfcu.org/rates_loans.asp
      - nerfhammer 12y ago
        The most recent announced average rate at the largest medallion loan bank is 4.06%: http://www.medallionfinancial.com/news_release_14-11-03.htm http://www.medallionfinancial.com/news_release_14-11-03.htm The historical average appreciation rate of medallions is 14%: http://www.aei.org/publication/chart-of-the-day-nyc-taxi-medallion-prices/ http://www.aei.org/publication/chart-of-the-day-nyc-taxi-med... The differential between the loan rates and appreciation yields may be about as much as you make using it to actually drive the taxi: http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-medallions-cost-1-million/ http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-me...
potatolicious 12y ago
Because it turns out the medallion cost is only a small part of the operating cost of a cab. "TLC’s medallions held by fleet owners, who collect rent of up to $132 a shift from drivers"[1] NYC cabs run on 2 12-hour shifts a day. This works out to ~$13/hr to pay for the medallion itself. This isn't nothing, but ultimately the cost of the car, gas, insurance, etc, are still the dominant factors in operating a cab. So yeah, theoretically without the medallion cost Ubers can be cheaper than a regular taxi, but probably not by all that much. [1] http://www.thenewyorkworld.com/2014/01/20/taxi-medallions/ http://www.thenewyorkworld.com/2014/01/20/taxi-medallions/
Nursie 12y ago
Uber take quite a big cut don't they? It's why I find it hard to helieve they can out-compete in cities where there's already an open market (medallions seem to be a weird US thing?)
- Thimothy 12y ago
  Nop, they are common in Europe too. Although most european countries have severily limited the operation of Uber, so...

look_lookatme 12y ago

UberX pricing feels comparable, on average, to Yellow/Green Cabs for me, in Brooklyn. Sometimes it might be more expensive, sometimes less, but it mostly around the same. I take Uber probably 5-8 times a week.

pbreit 12y ago
UberX is almost always less expensive than a taxi. Certain NYC trips might be an exception.