Comment by albertshin | Hacker News Reader

Comment by albertshin | Hacker News Reader

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In boston. A few months ago, my phone died on me when I was just about to call an Uber. While debating walking instead, I checked with a passing taxi to see if he could take me to Central and asked how much it might cost around and quoted him the Uber rate (which had some surge baked in) that I had seen as a comparison. He laughed at me and said, "that's really cheap. This isn't an Uber!"

So, I'd say in Boston, 1) taxis are still somehow charging above competitive prices and getting customers, and 2) silicon valley/Saudi Arabia are still subsidizing my rides. The "fair price" probably lies in between the two.

Also, as an aside, it's surprising that given this extensive competition from all types of drive share services for the last few years, the taxi industry haven't found ways to reduce prices. Instead, it seems to be spending resources on figuring out ways to block the competition. For example, the new Logan airport rules seem ridiculous and just reinforces the notion that the taxi industry is surviving only by rent collecting through lobbying. [1]

[1]:https://boston.cbslocal.com/2019/04/25/uber-lyft-logan-airpo...

Typical taxi company has serious overheads. They must pay for medalian/licensing. They own vehicles and bear fuel, maintainence, insurance. They drivers are paid fixed wages regardless of rides. They maintain on-call service center. Many Uber/Lyft drivers are in affect work for “extra income”. That means they may have other jobs and driving can be lower paying job on the side. It’s like high school kid can decide to be nanny for $5/hr while putting real nanny out of the job who may charge $15/hr.

That's because the high school kid's expenses are heavily subsidized by VC fund of mom & dad. At some point, they'll likely get sick of footing that bill. The same goes for Uber and friends.

Uber and Lyft (and AirBnB, VRBO, and Homeaway) are also subsidized in many cases by “I already own an expensive asset and carry all the fixed costs already, so I just need to make a profit over marginal costs”, which is largely the same as people who take a second or hobby job (including teenagers babysitting).

That subsidy is structural, IMO. That we see a lot of full time AirBnBs and full time Uber/Lyft drivers may mean it’s sustainable even outside of VC support. (I have no inside information, but I suspect that ride-sharing is economically profitable long-term at current end-user prices in all established markets.)

A lot of Uber drivers I know or had the chance to speak with actually leased/bought a car just for that, whereas Airbnb is a different capital investment.

Right. I typed unclearly. The fact that some Ubers are full time and carrying the full cost of a dedicated car suggests that it’s even more sustainable than just covering marginal costs with a profit margin but covering full costs with profit.

Remember that that price also included commission from UBER, so you were already offering him 25-35% extra.

Taxi drivers in Boston have a commission too, they have to rent or lease a medallion for hundreds of dollars a week (and it's much cheaper now - thanks to Uber & etc).

In large US cities they also have to "tip-out" the hotel doorman and the dispatcher so they can get the high value riders.

Depends on the city. This is far from being the standard, even in the US.

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