We can’t imagine those days where it was a nightmare to commute to the office or any party. It was those days where we used to wait for taxis along the roadside for our requirements. All these were changed with the opening of the online cab service in the taxi business industry. It made a revolutionary change in the taxi industry. You may wonder how it works well to earn revenue. It is based on Uber Business Model
When we hear about the online cab, the first and the foremost online cab service which strikes our mind is Uber- The topmost emerging online taxi business and a very good taxi booking app which helps the customers to commute as well as the drivers to move along with this transportation network business.
With the arrival of Uber into the taxi industry during 2009, drastic changes happened to overcome the traditional way of booking a taxi. Through Uber, you can book a taxi online within a few minutes.
It introduced cheap rides when compared to traditional rides and there is no tipping system in Uber. You may wonder how it works well to earn revenue. It is based on Uber Business Model
In this article, we will look into the Uber Business Model and how it works
What is Uber and how it works?
- As we have already seen that Uber is an online taxi service started in 2009 by Travis Kalanick.
- They launched Uber App as a smartphone Application, where customers can book the taxi from the Uber App by enabling the GPS and internet connection.
- The taxis available near to the customer place will be listed and the customer can choose the taxi based on the route to pick up point.
- Customers can also select from standard cars to luxury depending upon their requirements.
- When the drivers accept the request, the taxi can be tracked by the customers and the payment is calculated based on the fuel consumption, time taken for the ride, distance traveled.
- The payment can also be paid during the booking or after the ride. If the ride gets canceled the payment made will be back to the customer’s account.
What is Uber Business Model?
- Uber business model is the business model followed by Uber. They collect efficient drivers with their own cars who want to earn income from Uber.
- The company does not own any car. It charges some percentage of income for making use of its platform.
Uber Target audience
- All age groups use the Uber platform for their daily commute. Customers of different age groups like college goers to office goers make use of this platform.
- It provides a very cheap ride when compared to other private cab services.
- It is mainly used by tourists, to/from airports, shopping, Uber is a complete solution for all age group customers.
Uber Revenue Generation Model
- When you look into the revenue of Uber, it completely depends upon the fare charged for the ride and for the cost of promotional activities.
- Uber does not have any other source of revenue as of now. This is a unique business model of Uber.
The Revenue Generation Model can be described as follows
Adopts different cab models
- Uber has a wide variety of cab models and not restricted to any particular model or group of people.
- Uber X is a model of black cars, Uber SUV is a model of luxury cars, etc.
Surge pricing technology
- The demand for their service determine the cab fares, the price increases per mile. This is a part of their business model.
- The updated price will always depend on the number of drivers available and the requests placed by the customers.
Other Uber rides
- Not only taxis, but they also started launching other Uber rides like helicopters, boats, delivery service, Pick up service using the motorcycle, truck service, etc and these new services add value to their business model
Uber for X Model
- Uber has an aggregator business model and Uber for X model falls under this Aggregator business model.
- By using this business model it collects the elements required for the service and this service will be available under a single brand name.
- In the Uber business model, the cab rides are related to their service. They don’t own any cars.
- They view their drivers as their partners and they provide the platform for the drivers to use the brand name “Uber”.
- Here in this business model, there is no employer and no office. Uber uses the partnership with the drivers in their business model.
- The drivers or the partners will sign the contract with Uber by following the terms and conditions of Uber regarding the cab ride services.
The aggregate business model of Uber
Uber Business Model is a Partnership Model
- As we have already discussed that Uber does not treat their drivers as their employees, instead it maintains a partnership with them.
- Basically, it does not act as a transportation company. Here the drivers have all the rights to accept and reject the agreement based on the terms and condition.
- Drivers build their own business structure and are officially under control with Uber
How Uber works with this Business Model.
- As the drivers are the partners with Uber, they both together decide the commission structure in their business.
- Uber acts as a platform for the partners to get the rides through online booking and they set up a commission from the customer fare.
- Usually Uber charges 20-25% of the ride charge and the drivers as partners need to pay out this commission to Uber.
Uber- Customer Interface
- The Uber App is available for customers on a smartphone to book the rides.
- The customers can share feedback regarding drivers after the ride.
- This is, in turn, will help Uber to take necessary action against drivers to enhance their business.
Price calculation of the ride in this business model
The Distance and the time spent on the ride determines the price.
Dynamic pricing in this business model
- Uber is very transparent about their business. There used to be some change in the price during peak hours, bad weather or during any public holidays.
- As the demand increase, customers need to cooperate with the price inflation.
- Uber informs its customers regarding the price structure in advance to avoid any kind of inconvenience to its customers.
The success of Uber Business Model
- As people don’t compare the services of the transportation network companies, Uber stays profitable with their service to the customers. Thus with this platform, it gained a huge number of customers for its business
- Apart from the strong network, a huge number of cars offer a very good service to its customers. The ride fares are cheap when compared to other private services and it is very pocket-friendly.
- It is an admirable opportunity for the owners of the vehicles who gets into this business and finds bankable.
- As more people incline to this type of ridesharing for their daily commute, it is definitely going to be a profit for the Uber drivers.
Hope you will find how the Uber Business Model works. Uber Business Model is a Business Model which is very transparent and easy to understand for its customers and driver partners.
They mainly satisfy their customers and their driver partners to run their show. A very good platform for the vehicle owners to start their business and they stay success with this Business Model.
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