All the prices are artificially kept low as Uber and Lyft seek market share to bankrupt traditional taxi service. I expect within five years you will see dramatically higher costs.
Frankly, I don't get it why so many people in tech are so biased against smaller independent businesses such as taxis and mom-and-pop shops, so that the shareholders have more money (and they already don't know what to do with their money and beg entrepreneurs to take them to beat index funds returns). Like everybody has to be a corporate slave otherwise doesn't have right to exist. It's obvious those smaller/independent companies are the target of Uber/Lyft, sucking life off another class of people that would otherwise have bearable conditions of their existence. This is frankly a highway to hell for everyone.
It might have something to do with taxi drivers specifically since they're not known for being the most honest and decent service providers. Whether it's scams like letting air out of their tires, not starting the meter or taking longer routes or discriminatory practices like avoiding certain neighborhoods and driving by minorities to pick up white people (yes, this is a thing and a friend and I had it happen reliably enough that it became a running joke), the pre-Uber cab situation was pretty bad and there wasn't much riders could do about it. I admit to some schadenfreude at seeing taxi drivers struggle after so many years of putting up with their BS.
But taxi companies have regulatory capture. How are giant VC funded companies dumping service into the market below cost supposed to compete with that?
This whole problem exists not because taxis didn't embrace technology soon enough, but because in 1936 they put a cap on issuing new medallions in NYC. Which meant that since then, irrespective of the economic growth and the number of people, the number of taxi cabs became severely restricted. This created an artificially increased prices for taxies. In the year 2011 a taxi cab medallion was sold for $1 Million in 2011 [1].
Taxi Cab industry is a heavily regulated industry which was screwing only one group of people, i.e. the consumers. This is why there is little love for the cab industry in America. For more economic analysis on this, check out the lecture by Murray Rothbard given in 1989 at NY Polytechnic [2].
> Frankly, I don't get it why so many people in tech are so biased against smaller independent businesses such as taxis and mom-and-pop shops
As a tech person I'm not against smaller independent businesses. I actually support them as much as I can. However, I also support convenience. Smaller businesses should strive for convenience, and tech businesses should consider supporting and enable those smaller mom-and-pop shops to flourish. Lyft and Uber are, in fact, doing exactly this, by solving a transportation problem for a lot of smaller guys. Like me. I save a lot of personal money because I can get around on-demand and don't need to own a car. (I rent for longer trips, and the amount I spend on Uber+Lyft+Enterprise+Zipcar is much less than the cost of car ownership.)
Taxis are very, very far from your innocent mom-and-pop shop. I'd be quite glad if they die. For the following reasons.
- Taxis regularly rip you off when they drive by meter (I say this from experience). Uber drivers don't. Seeing the car on a map with your destination and route gives me peace of mind.
- Being able to set the destination on your "taxi"'s GPS navigation system using your own phone is amazing. You can just click on addresses in your calendar events and get a car without having to spell out street names for taxi drivers. It also helps a LOT when you are in a foreign country to be able to just click on stuff and physically get there, no questions asked.
- Taxis don't have a carpooling system. As a customer, I want lower fares and lower carbon emissions. In fact I bike most of the time and seldom drive a car because I don't believe in 1 person per car as a sustainable form of transportation. Taxis don't solve that problem. UberPool and Lyft Line are taking a step forward here. It's a step toward Public Transportation 2.0, the way I see it.
- Not all taxi drivers take credit cards. Especially outside the US. Uber solves the payment problem in a lot of parts of the world.
- In about 95% of places where I use Uber/Lyft, taxis don't really run around on a regular basis. You have to find their weird phone numbers, find a phone, and call them. And sometimes they don't show up for 45 minutes. Having a system that tells drivers where people want rides is a lot more fuel- and time-efficient than taxi drivers trolling around looking for business. (Guess why taxis are more expensive!)
- ONE app to get you a car on-demand, in any country, anywhere. How cool is that?
I have multiple personal stories in which cabbies and cab companies (based in San Francisco and Austin, TX) colluded to defraud me out of hundreds and hundreds of dollars. I have told these stories too many times to get any catharsis out of repeating them here — but I am confident, and experience confirms, that similar scenarios would never play out with Lyft or Uber. An individual driver may be a cheat, not for long, and without Lyft/Uber covering for them (unlike Yellow Cab)
I am sure there are regions where taxi companies don’t completely suck. My very limited experiences w/ cabs in the South of France was markedly better than with taxis in Texas and San Francisco, for example.
I am very supportive of small business. And dislike large corporations. And surely believe that large corporations are behind many regulations that makes small business bankrupt. They buy favors and pass laws favoring their stance. Government offers their service with a fee, they buy it. But, taxi business is by large enter to this territory. Entering business is very hard with historical or meaningless reasons. I do believe there will be independent taxi drivers using intelligent services that behaves differently than Uber. That of course may change when autonomous cars take over.
I can't wait to bankrupt my local surly cabbies, and have my transportation controlled by a Californian company who'll be able to dictate prices and sell my data.
I get where you're coming from, but you could say the same thing about software purchased on any app store, your mobile phone and a bunch of other things.
Not sure where you live but in most big cities you already have the choice between some Californian company, at least one European company and sometimes Chinese (or chinese backed) companies. Someone will get your data but you can choose who that'll be.
Creating an app like uber is cheap enough that competitors will pop up whenever uber feels like making money.
Because if they are too high, the taxis will make a comeback. I think uber understands that the network effect is only so strong. Just look at Facebook and see how it brought out the big guns against a seemingly benign rival: Snapchat.
You might be asked to extract rent but you can't extract too much (just my conjecture, no clue how much is too much)
The network effects are pretty small when you do a single passenger trip. But multi-passenger trips(Uber pool) have quite strong network effects and a lot of room for margin.
> The network effects are pretty small when you do a single passenger trip. But multi-passenger trips(Uber pool) have quite strong network effects and a lot of room for margin.
So I might be the last person to realize this but you're right! If I don't mind being ten or twenty minutes late, then how about taking this a step further with a bus? You enter where you want to go and the closest bus gets rerouted based on where its existing passengers are going (or if you're going somewhere weird it won't trigger the bus but rather a small Toyota Corolla I am not completely opposed to small cars). It doesn't even need to be self-driving. The main thing is there needs to be enough of them (and it would be nice if they had access to bus lanes but the amazing Uber legal time I am sure can figure this one out). This is brilliant because if we can reroute bus traffic based on who is travelling and where (and we know live traffic information thanks to Google and Waze) we can make "public transit" a lot more palatable. I'd argue we can realistically make an "unlimited" rides card that allows you to ride any uber pool anywhere for say $200 a month? I mean if you never have to wait for the bus/taxi for more than twenty minutes, it is surely worth it right?
I guess the point is that there is a lot of room for innovation with uber pool and uber has to continue to innovate to stay ahead. If they do, I don't mind if they take a small portion of the money. We as a society will be better off with fewer cars on the road.
anywhere doesn't actually mean anywhere but anywhere within certain areas. Can't uber pool between brisbane and sydney :)
The leading startup in making that vision is Via, they just got $200m investment from Mercedes and a partnership, they are deployed in 3 major cities in the us, also starting in Europe via big partnership and working on dual model of both their own service and licensing their software to others, what could enable rapid takeup.
As for prices, recently I read a story comparing ride services, for 4mile trip , Uber costs ~$20, via $6(although via can sometimes get delayed for long, but I think with scale that could greatly improve, and maybe prices a bit).so this may give a scale for the practicality of $200 free pass.
And btw to run such service you need 8 passenger minibuses , which are commercial vehicles driven by commercial drivers, who hate Ubers guts,and probably won't work with Ubers model, and if Uber changes their model and gives preference to these drivers, they could alienate their own drivers.So maybe that's why they don't fully compete.
And one more thing: the other big possible improvement is in vehicle design, to allow multiple people sharing a vehicle more comfort and privacy. But now that Mercedes is in the picture and they said they will optimize vehicles , maybe this will get solved.
> Because if they are too high, the taxis will make a comeback
Uber can change price dynamically while you load your app within seconds. Somehow doubt the whole Taxi industry of Medallion et al can reboot in a matter of seconds (or days or months).
Taxi costs in many areas are driven by high barriers to entry (medallions or tests) and taxi drivers spend a high percentage of their time waiting. The surge pricing system and apps can better match demand and supply so that you should be able to get the same hourly wage for lower costs to the passenger.
The problem currently just is that while Uber could be something like 25% cheaper, they are actually rather 40% cheaper and pay the difference out of their own pocket.
Overpriced is this: I can pay to a pirate taxi service 2-3 times less and he is still fine. For example, Taxi drivers here needs to pay money to medallion owner and prices are determined by their guild and government centrally. There is no competition or any concern of consumer expectations.
He said nothing about what wages the employees make. As a consumer this is not your concern when you think about pricing. I don't care how a company manages it's money. I just care about how much their services cost versus what it's worth to me.
Except it does. A taxi occupies 100% of the attention of a human being as he drives you. How the heck can you not considet his wage when asking for a price drop? If 75% of your price goes to the driver and the driver makes minimum or near minimum wage, where do you propose the cost savings come from?
GPS+Smartphones killed any special skills that drivers needed, so Uber/Lyft wages are being driven down to McDonalds levels, because there is no barrier to entry, and the flexibility provided by Lyft/Uber is actually helpful to people who are already working at a part time job that has shitty unpredictable hours.
And if one of these companies goes under, expect wages to fall further because they do not need to compete with the other.
Yes I live in the Bay Area. Last time I took a $9 Uber ride, I checked Lyft and it was $21. This has happened enough times that I check Lyft prices increasingly less frequently.
Both these companies have sophisticated price discrimination systems; two people catching the same ride at the same time will pay different prices, as I found out recently with a friend who gets much lower prices on Uber than I do.
Interesting - I gander it's at least somewhat related to how often you use the platform. People who rarely ride probably get lower prices in an attempt to capture them as riders.
My hypothesis is that they try to figure out what prices to set to extract maximum profit, based on how much they think you're willing to pay, how busy the drivers are, how much profit they're currently making in that geographic area, etc.
It's much easier to entice new riders by giving them coupons than it is to generally lower their fares.
Uber pricing varies quite a bit. I use uberpool frequently and have noticed a 40 percent change in price by changing my destination by a block or two. Which for the ride I am requesting is a very minor change.
How can that be profitable for uber? Never heard of that pass before but sounds like an awful idea for them (and a great idea for commuters with a 15-20 mile commute). Having a private driver and no costs for a car for ~$160 per month is cheaper than just the car when you drive yourself.
Would love them to introduce that in London, the price would be the same as for a tube season ticket.
For me it’s the opposite. I think it’s all about the city, promotions, and how these companies view you. I recently priced a ride to my friends place immediately after he talked about a $3 ride home... for the exact same location it was $9 for me. Things are very dynamic.
Uber subsidizes less. Its losses as a percent of gross bookings is -8% while Lyft's is -13.5%. Uber is cheaper while subsidizing less because it's more efficient.
