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Comment by objclxt | Hacker News Reader

> And what most people miss, is that the 3.4 billion is the 30% cut Uber takes from a ride. Prices don't have to rise 20% to break even, prices have to rise 6%

No, they have to rise by more than that. Your math is technically correct (a 6% rise gives you an extra $700 million), but you are assuming that the price increase goes entirely to Uber. There is no way Uber can increase prices by 6% and give none of that upside to their drivers - they would flee to platforms offering better terms (like Lyft).

If Uber was to be profitable this past quarter they wouldn't have needed an extra $700 million in fares, but an extra 2.3 billion - which is a 20% rise.

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You haven't been paying attention to what Uber's been doing. They started by charging flat fares on Pool, now they're charging flat fares for all rides. They're decoupling the price that the rider pays from what the driver gets. Pool makes this obfuscation easier, since the calculation is much more complex for rides that are partially shared. They do seem to be raising prices on riders without passing it on to drivers.

That's certainly true - things like Pool make it easier to obfuscate the cut Uber takes. But still, price rises don't just have a potential to alienate passengers, but drivers as well. If anything, drivers may well be more fickle than passengers, since someone who takes Uber once or twice a week has less to lose than someone driving for them 8 hours a day.

True but a 6% increase overboard is practically invisible.

Will you notice if you pay $7.51 one day, and 7.96 the next day? What with all the surge pricing, route changes, time of day pricing, and other schemes Uber throws at you, you're lucky to get the same price day to day.

If they are so invisible not to matter, then why aren't they higher already? Why would Uber lose money if they didn't feel like they have to?

I think there is always the factor of other apps and e.g google maps making prices easily available for comparison etc.

If Uber increases from $7.51 to $7.96 you might not see the difference in your head, but then if for example lyft is offering $7.80 for the same ride, whats more likely for you to choose?

I think they'd be very careful with increasing prices and wait their competitors to increase prices first so they can follow up, or else they might run themselvs out of business.

To be fair if you take an uber regularly on a regular route you know how much it is going to cost. Sure they could bump up prices when a user takes a journey they don't usually take but it is noticeable when your regular ride cost increases.

they can 'simply' (probably not that simple, of course), introduce higher fares for new users. never used uber myself, and if i did, I'd have little to compare the cost to. That 6% they need could easily be 7, 8, 9 or 10%, and I wouldn't know.

In my case, at least, living in NYC, I compare prices with what I pay for standard Yellow Cabs. Sometimes the Uber prices are not that much lower for routes that I know. In NYC, the Uber and Yellow Cab rates are almost the same. Compare that with Chicago which has far more reasonable rates. All of the inputs (car cost and operations, gas, labor of driver) is the same in NYC and Chicago, yet NYC is far, far more expensive for users. Gett and Via (the later is a carpooler) has much better rates.

For the rates Uber charges in NYC (UberX)

Base Fare: $2.55. (NYC Yellow Cab - $2.50) Per Minute: $0.35. (Yellow - $.50) Per Mile: $1.75. (Yellow - $2.50) Cancellation Fee: $5 (Yellow -- no cancellation) Service Fees: $0 Minimum Fare: $8. (Yellow - no minimum)

Chicago: (Uber X)

Base Fare: $1.70 Per Minute: $0.20 Per Mile: $0.95 Cancellation Fee: $5 Service Fees: $1.40 Minimum Fare: $4.40

>They're decoupling the price that the rider pays from what the driver gets.

And this is somewhat transparent, right? Everyone loves getting middle manned, I'm sure neither drivers nor passengers will mind.

Getting a lift is a commodity. It needs to be cheaper form the buyer's perspective and it needs to pay better from the driver's perspective. Not sure how that works while also earning bing money for the middle man. Uber smells like a self-driving play, and that's falling apart.

(on the assumption that your first sentence was sarcastic) Everyone does love getting middle-manned, it's why uber is successful. We had taxi services before uber, but they were unreliable and sometimes meant calling around 3 or 4 to get a cab at busy times. No accountability of where the cab was if it was late / no showed. Uber changed that and people flocked to them in their droves. Same for airbnb and basically any other major marketplace app / site.

They may now be looking like an autonomous driving play, but that is not why the company started.

People use uber because it is cheap and easy. If taxis and other ride services roll out apps (which they are) then uber has lost its advantage in ease of use. If uber starts to feel expensive as well then they have lost everything that made them popular. Uber has to start squeezing someone for $700m a quarter. That squeeze isn't going to feel good.

That's happened though. I live in London, where black cabs are the de facto standard. They should be one of the examples of the most organised taxi 'companies' in the world - brilliant brand, effective organisation and a technically closed market and yet they have 3 major apps (gett, mytaxi(hailo), taxiapp) meaning they can't offer the same experience as uber. Black cabs also cost 4x what an uber costs for the same journey, which certainly doesn't help.

People want 1 app which does taxis - uber fits that bill pretty nicely, and to be honest, I don't think users would really notice if they bumped prices by 10%, certainly not in London.

</conjecture>

Lyft just isn't a real competitor outside of major American cities right now. Go to a city without an international airport and see how many lyft drivers there are.

Oh, for sure. But being spread thinly over dozens of small markets isn't necessarily a better idea than concentrating on a few large ones.

Counter example India, Lyft can now never come here. Soon it will be one of Uber's biggest market.

Why not?

We had a local competitior backed by soft bank. They are in bad shape. All because of execution. I don't see any other company able to match that ruthlessness.

So, Uber will be able to take the entire market as long as they don't make it lucrative?

That seems to be Uber's plan everywhere, and they look quite successful at it.

Ola seems to be doing fine and I think they've some sort of partnership with lyft where at some point in time you'll be able to use the lyft app and hail ola rides. This hasn't happened yet, though.

I believe that Lyft doesn't have to compete globally with Uber to be a successful business in its own right. I also believe that Uber isn't immune from being crippled by competitors that operate in a very small but key subset of Uber's markets.

There is very little network effect with Uber. Sure, you can hop off a plane anywhere in the world and open Uber to get a car, but that is a very small number of people overall. I would contend that most people use whichever ride-sharing service is available and most economical in their own city, and if that same service is available on the rare occasion that they travel, then bonus.

Of course, if Uber beats everyone else to the punch with proprietary self-driving cars and undercuts prices profitably, they win. There seem to be some very large issues with that, however.

You're ignoring that businessmen who travel all the time are very heavy users of Uber and similar services.

I'm not even a frequent flyer, but I'd estimate that a good 80-90% of my Uber usage is travel-related. At home, I have tons of other options to get around, but on a tight schedule in an unfamiliar city, I basically default to Uber all the time, because I rarely have the time or risk tolerance explore alternatives.

One of the things I love about Uber is that I can use it in SF, Singapore, Manila, Helsinki, wherever. It also works sufficiently well that I have near-zero incentive to try out Lyft/Grab/Ola/whatever, particularly since this usually involves yet another tedious sign-up process of entering credit cards and PIN confirmations and yadda yadda.

I think their point was that well-off people who travel all the time are still a tiny portion of the population.

Sure, but that tiny portion still supports the bulk of the airline and hotel industry, and (I suspect) a very disproportionate share of Uber's business.

They basically support the whole transport industry. First-class seat planes account for 10% of usage and 30% of revenue. That's huge.

As a business traveller you don't really care about the price as it's paid by your employer. So you'll take the fastest and most comfortable option. In many cities that's still a cab as they are much faster to get at airports than Ubers.

The other alternative are exec cars which Uber offers but which will often be pre-booked locally.

I think Uber could get many business travellers on board if they'd offer some rewards system (similar to airlines). Otherwise there's no reason to be loyal to Uber if a local cab or some other hire service (e.g. Lyft, Addison Lee in London) are faster to use.

Uber already has a partnership with SPG (Starwood Hotels). Catch an Uber, get hotel points; catch an Uber while staying at a SPG hotel, get even more points.

https://www.spgpromos.com/uber/

> I rarely have the time or risk tolerance explore alternatives.

If your goal is to save time and mitigate risk, then pre-book with a local service before you even depart. Or, as many business travelers do, ask the company/person you're meeting to arrange a car to collect you. Then you just have to look out for one of those drivers in Arrivals holding a card with your name.

Many of the international airports I've traveled to have excellent transport links to the city centre, primarily by rail. They're quick, cost effective and low risk.

I don't see a compelling reason to book with Uber on arrival.

> Many of the international airports I've traveled to have excellent transport links to the city centre, primarily by rail. They're quick, cost effective and low risk.

While I agree with your point, rarely are the rail links less risky to find/buy tickets/navigate than simply walking out the door at arrivals and catching a cab door to door.

It's a good point about the ticketing. However, trains don't get stuck in traffic (generally).

The two airports I fly into quite regularly are London Heathrow and Vienna. At both locations I'd prefer to catch the Airport Express train than mess about with taxis in traffic.

I was in Hong Kong a few months ago and it was extremely straight forward to catch the airport train. Very, very obvious where to go, how to buy tickets etc.

Try catching a cab from Sydney Kingsford Smith airport into the city during peak hour. You will sit on the Eastern Distributor for a long time.

It doesn't work at all in Germany, Spain, Iceland, and in smaller towns in UK. Uber isn't very reliable in Europe

Yeah but frequent flying businessmen are also the kind of people who will do research and pick better options quickly if they are available, it's not plausible for Uber to have a permanent monopoly.

One of Uber's massive problems is lack of predictability. When going to/from the airport I can't fuck around with surge pricing, I need to be able to have a travel budget that doesn't change sharply for situations out of my control. I don't want to miss planes. A service like Blacklane (which by the way is now in the US and is growing very quickly yet seems to rarely make the articles that talk about Uber's competition) neatly solves that problem for you, and generally has better service and more professional drivers.

I am a frequent flier and your idea that there's zero-incentive to have a backup or alternate option to Uber ready to go doesn't resonate with me. Uber isn't reliable enough to forget about other options, and as long as those exist and are viable Uber's supposed "monopoly" strategy will likely be regarded in retrospect as expensive and stupid waste of capital.

Do Uber drivers even see the fair that is charged their passengers? If not, then it's not clear Uber can't keep most or all of a 6% price increase without losing drivers to Lyft.

they don't see the fare charged to the customer, but people have figured out the customer is charged a higher fare than the driver sees by comparing notes, there is a lawsuit about it currently.

http://www.latimes.com/local/lanow/la-me-uber-drivers-lawsui...

And raising fares by 20% is going to reduce demand.

You're absolutely right.

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