If Uber raises 6%, the revenue Uber will decrease. If you raise the price, simply there will be less rides because people will find alternatives such as Lyft, taxi, or even public transportations.
I agree that they are competing against Lyft on price, but they will both sooner or later have to reach break-even; neither will run at a loss forever. Rides will shift between them, but the rideshare market as a whole will shrink trivially when it does.
So it's fantastic that Lyft is doing okay in the US. But Uber is playing a whole different game.
Not a big fan of Uber as a company though. If Lyft of another viable competitor set up shop here then I'd be open to switching.
I've caught taxis on the exact same route twice because my phone was dead and I couldn't order an Uber. One was $48 and the other was $55. I believe it's more on a Friday or Saturday (they have some 'off-peak' fee or something), but Uber obviously has the occasional surge on those nights too.
Using Taxis, in Melbourne at least, seems to be lighting money on fire.
The only things Uber add to the service mix is an app and a bad attitude, neither of which create any value for me.
What Uber brings to the table isn't high end hire cars but rather UberX which is a game changer for price and quality. Finally taxis can't refuse to take you somewhere or not use the GPS. And not sure how you had a "bad attitude" experience given how seriously drivers take their ratings.
This often surprises Australians, so if you are one of them you're not alone. In my view Australia has a culturally ingrained reverse snobbery, which leads to false judgements about value and utility.
The "bad attitude" I believe is clearly attributed to Uber, not their independent not-employees-at-all contractors, whose exploitation, low income, and zero benefits I have some limited sympathy for.
That's not how the market works at scale.
So pretending to know what Uber customers will do is asinine.
This. Subsidies don't scale. When you're company does relatively few rides, you can afford to subsidize rides on the order of dollars. The more rides you do however means can only subsidize rides less and less until it has a negligible effect on a rider's decision to switch providers. At that scale, all companies will start to move away from subsidies.
Subsidies can't buy the same amount of market share at scale without losses growing linearly, which is unacceptable to investors. Subsidies will decline and should eventually disappear in mature markets even with fierce competition. Heavy subsidies really only make sense in immature markets where there is a land grab.
You are assuming facts not in evidence. If you don't know Uber's price elasticity of demand, you can't predict that. It is likely that the number of rides will decrease, but, if it decreases by less than ~6%, their total revenue will increase.
That is the source of price elasticity of demand. Customers are not identical.
Some people value convenience of only checking one app more than a small price difference. Some people value the speed of getting a car and if Uber can provide a car 3 minutes faster, may be willing to pay a few percent more. Some people prefer the UX of the Uber app and how fast it is to actually compute a trip / connect to a driver compared to Lyft. Some people are submitting expense reports and would prefer to have all their car service expenses from the same provider, for convenience.
And some people don't.
Just because Uber hasn't turned a profit (which they may have, in local areas, for all we know), doesn't mean they couldn't. It's completely rational for them to price low and attract more customers if they are more able to raise capital than their competitor in order to make it harder for their competitor to stay in business.
I think they call it Taxi service, or something.