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Comment by remflight | Hacker News Reader

You don’t understand Uber’s business model. They want prices so low because that’s how they make money. Lower prices equals more rides. They know that the higher the prices the less overall rides they will get. You thinking that the goal is to raise prices is literally 100% wrong.

In Brazil during their worst recession in decades, they had something like 300k drivers. This dropped the prices to the point where so many more rides occurred that everyone made more money and the customers were happy because the prices were low. That’s what they are going for, not some sort of moat based on raising prices.

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You can't lower prices to below costs and make money. If they're not profitable now, to become profitable they need to either cut costs or raise prices.

The only reason to have prices below costs is to gain market share so you can do one or both of those later.

What costs do you think Uber has left to cut that they haven't at this point? Maybe workforce.

This is all a common well known business tactic, which many businesses have used in the past to establish market position. It's what they'll do with that market position people are worried about.

I confess I know nothing of Uber's running costs but in my layman's understanding I think GP point is still valid. Driver buys the fuel and services the car. How does having more rides cost Uber more?

If they pay the driver more than they charge the rider which they have specifically done at points in the past, then every ride costs them, even if their other overhead is zero.

In the past they did this to achieve market dominance over taxis and lyft because they were drowning in billions of dollars of VC money, and the whole point of getting all that money is to become a market leader as soon as possible, even with loss-leading strategies.

You can do the math and find an approximation of the price–demand relation ship ( assuming you adapt prices to keep your business profitable, and users react by adapting demand).

This system has two fix points, one at the normal taxi price and much much lower. Point is , the second fix point needs the majority of the population to stop using a privat car…

> You don’t understand Uber’s business model. They want prices so low because that’s how they make money

this sounds like you don't understand the concept of a business model.

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