- 1 Uber Begins Apology Tour With More Driver Benefits
- 2 How Uber Makes Money? Understanding Uber Business Model
- 3 Lyft vs Uber — What Are The Differences For Drivers? (Part 2: $$$ + Electric Range Issues & Support)
- 4 Uber hopes to silence critics with more UK driver benefits
Uber Begins Apology Tour With More Driver Benefits
If youвЂ™re tired of seeing headlines about Uber, know they wont dissipate anytime soon. Uber is working feverishly to reverse its bad image now that founder Travis Kalanick has one foot out of the company, so youвЂ™ll see a lot of new updates in the coming months.
Uber recently announced its вЂњ180 Days of ChangeвЂќ campaignвЂ”basically an apology to drivers and employees whoвЂ™ve dealt with the companyвЂ™s toxic work environment, mistreatment, and neglect amid all the sexual harassment allegations and other scandals in the past year.
The ride-share company is attempting to wow drivers by offering them more benefits, including a 24/7 support hotline and a new вЂњdelivery feeвЂќ for passengers who leave things behind.
вЂњWeвЂ™re making a commitment to you,вЂќ states Uber on its website. вЂњFor the next 180 days (and beyond) weвЂ™ll be making meaningful changes to your driving experience. Some changes will be big, some will be smallвЂ”all will be the changes youвЂ™ve asked for.вЂќ
The delivery fee requires passengers to pay $15 ( ВЈ11.50) if they want their lost items returned. ItвЂ™s only fair that drivers get paid to return forgotten objects, since sometimes theyвЂ™re miles away from where their passengers live. ItвЂ™s not only a waste of petrol, but also time.
As for the hotline, Uber said in a blog that itвЂ™ll help drivers with a вЂњquick question or an incident to report.вЂќ Other benefits Uber has promised drivers include in-app fare fixes, rating protections for when they are rated unfairly, and faster document reviews so their вЂњearnings arenвЂ™t interrupted.вЂќ Uber is also rolling out tippingвЂ”years after drivers first complained about the missing feature.
While all these new perks sound nice, Uber still has a lot more ill will to compensate for. But the company seems to realize that fixing things will require something more than just swapping in a freshВ CEO.
How Uber Makes Money? Understanding Uber Business Model
Uber Technologies, Inc. is a technology company that enables the users of its mobile applications to arrange and schedule transportation and/or logistics services with independent third party transportation and/or logistics providers of such services. Uber refers to these providers as driver partners and delivery partners respectively. Uber technology platform enables the communication between its customers and partners in all the transactions. Uber charges the customers for the services provided by its partners, keeps its commission, and then pays the rest of the amount to its partners. Uber does not itself function as a transportation carrier or logistics services provider.
Uber was founded seven years ago in March 2009 in San Francisco, California, USA. As of March 2016, Uber serves 194 cities in North America. This is nearly half of the total 395 cities globally where Uber services are available. Uber started expanding internationally in 2012. Now, Uber is available in 201 cities outside the U.S. in over 60 countries. This includes 26 cities in Central and South America, 70 in Europe, 20 in Middle East Africa, 73 in Asia, and 12 in Australia and New Zealand. Uber global expansion has been very aggressive. On an average, Uber has expanded into four new cities every month, during the last 50 months, since 2012. Uber now has over a million driver partners and is adding hundreds of thousands of drivers every month around the world. Uber started the delivery business in April 2014 and is now expanding its delivery business as well.
In this post, we will first discuss the Uber transportation business model. Then, we will talk about the Uber delivery business model.
Key Elements Of Uber Transportation Business Model
Uber business model is a perfect example of a multi-sided platform that connects two different types of users: Riders and Drivers. Uber offers mobile app to the riders to help them request the rides. The driver-side version of Uber mobile app helps the drivers know about the different ride requests and enables them to confirm their availability to deliver the ride.
Uber offers several types of cars to the riders. They can be broadly organized into three segments: Economy, Mid-tier, and Premium. The different car categories in the different segments are listed below. Please note that this is not an exhaustive list of categories. Also, all the categories are not available in all the cities. The car options available in different categories varies from city to city. The fare information for all the categories in a city is available at uber.com/cities
- UberX. An UberX is an everyday sedan. An UberX can seat 4 riders.
- UberXL. UberXL vehicles are larger in size then UberX. An UberXL can seat 6 people. An UberXL will be a SUV or a minivan. Its fare price is higher than UberX.
- UberSELECT. UberSELECT are premium cars. The vehicle standards are higher for UberSELECT. This option is for riders looking for an affordable luxury experience. An UberSELECT can seat 4 riders. Its fare price is higher than the cars in the economy segment.
- UberBLACK. An UberBLACK is Uber’s executive luxury car. Riders choose UberBLACK for a private-driver experience and expect pickup in a high-end sedan within minutes. Its fare price is higher than the cars in economy or mid-tier segments.
- UberSUV. An UberSUV is a high-end SUV. Its fare price is higher than UberBLACK.
- UberLUX. An UberLUX is a luxury car that provides ultimate luxury and style. Its fare price is higher than UberBLACK and UberSUV.
The following table lists the actual fare price for different vehicle categories in Los Angles. It shows how the fare for one category of cars compares to the other. For a 10-mile ride, an UberLUX is nearly eight-times more expensive than UberX.
Uber provides the riders with a licensed taxi cab through UberTAXI. The riders can use Uber to request the taxi and then pay for it at standard taxi meter rates.
In August 2014, Uber announced a carpool service known as UberPOOL. It lets an Uber rider share the ride and split the cost with another Uber rider headed in the same direction.
With Uber For Business, Uber provides a travel management platform to businesses. It enables businesses to provide transportation facility to their employees. It offers several benefits to the businesses such as centralized billing, ability to easily add/remove employees who can avail the facility, ability to define days and time of the day when the services can be availed, and eliminate the need to reimburse the employees travel receipts. The cabs are available at regular Uber rates. Uber does not offer corporate discounts or charges additional fees for the use of the platform.
How Uber Works And How Uber Makes Money In The Transportation Business?
Before using the Uber platform, the riders need to download and install the mobile app and provide the requested details (including the credit card details) during the sign-up process. To come on-board, the drivers need to go through a screening process that includes a review of their license and vehicle documentation and a background check. The drivers should own a vehicle from eligible vehicles list. If the drivers meet the Uber requirements, the drivers are registered into the Uber platform. Then, drivers share their bank account information where they will receive payments. Drivers go through a training on delivering high quality services. Finally, they install driver-version of the Uber mobile app to accept requests from the riders.
Once both driver and rider are registered with the Uber platform, they can communicate. Here are the steps on how Uber works and how the money flows.
- Driver and Rider need to come on-board first to use the Uber platform.
- When the rider needs a ride, the rider places a request to the Uber platform via the mobile app.
- Uber broadcasts the information about the rider request to all the drivers in proximity to the rider. Uber detects the drivers car location through the GPS technology.
- If a driver is interested in delivering the ride, the driver accepts the request.
- Uber sends the driver details to the rider.
- Driver proceeds towards the rider location, picks up the rider, and delivers the ride.
- Once the ride is complete, Uber automatically charges the rider’s credit card.
- Uber asks rider to rate the driver. At the same time, the driver can rate the rider.
- Uber pays the driver on a weekly basis. Uber keep its commission and pays the rest of the fare to the driver. Generally, Uber commission is 20% of the fare. However, it can be little more or less as well depending upon the city, the competition in that city, or the tenure of the driver with Uber.
Uber offers the following benefits to the riders:
- Simplicity and convenience. The riders can easily book a ride using the Uber mobile app. The driver comes to the pick-up location and the rider can track the approaching driver over the map on the mobile app.
- Safe pickups. When matched with a driver, a rider can see the driver’s name, license plate number, driver’s photo, and driver’s rating score. This helps the riders know who will be coming to pick them up.
- Several car options. The riders can choose from several car categories depending upon their budget. Some of the categories are: uberX, UberXL, UberSELECT, and UberBLACK. In some categories, the fare is even lesser than the normal taxi fare.
- Cashless payments. The rider’s credit card is charged at the end of the journey and the bill is sent via email.
- Anonymous feedback. After every trip, a rider can rate the driver and provide anonymous feedback about the ride.
- Consistent and professional experience. The Uber experience is consistent across the globe. Uber encourages drivers to provide high quality of services in order to receive higher ratings from the riders.
Uber offers the following benefits to the drivers:
- Flexible timings. Uber drivers can work when they want to work and how much they want to work.
- Incentives. If Uber drivers work for certain number of hours a week or complete certain number of rides, then they can get assured income or bonuses. Uber also provides referral bonuses to them when they introduce new drivers.
- Distance+Time based fare formula. If the traffic slows, the drivers get extra money for the ride because Uber uses both distance and time in the fare calculation formula.
- Make more money with surge pricing. In the situations of high demand and low supply (such as during weekend nights or bad weather), Uber automatically increases the fares. This helps drivers make more money for the same distance.
- Cashless transactions. Uber automatically charges rider’s credit card upon the completion of the trip. So, Uber drivers in most cities can avoid the hassle of carrying cash and making change.
- Timely payments. Uber makes payments to the drivers every week directly into the driver’s bank account.
- Driver feedback. Uber provides a two-way rating system. Drivers can also rate the riders after every trip. Riders who violate Uber terms of service can be prevented from using Uber.
After witnessing huge success in the transportation business, Uber started the delivery business and is expanding it now. In the delivery business, Uber offers UberRUSH and UberEATS.
UberRUSH. UberRUSH is a door-to-door delivery service that allows businesses to fulfill their local deliveries. When a business requests a delivery, Uber connects it with a Uber delivery partner. The delivery partner drives or rides to the business location, picks up the item, and delivers it to the customer. Businesses can track the location of their deliveries in real-time with UberRUSH. With UberRUSH API (Application Programming Interface), businesses can build on-demand delivery right into their existing IT applications and infrastructure.
UberEATS. UberEATS is a food delivery service powered by the Uber app. It delivers meals to the customers from their favorite local restaurants. To place an order, the customers can use the same Uber app that they use to get the ride. UberEATS option is visible on the Uber mobile app only if the service is available at the customer’s location. UberEATS promises a delivery time of 10 minutes or less. UberEATS achieves it as follows.
- UberEATS teams up with restaurants in different cities to offer a range of cuisines. The signature dishes of the participating restaurants change daily.
- UberEATS features a rotating menu on its mobile app curated with the dishes from the top restaurants. The daily rotating menu offers few standard options. The meals are not customizable.
- UberEATS delivery partners visit the restaurants and pick up several bags of those meal options. When a customer orders the meal through the Uber app, the delivery partners are able to quickly deliver the item because they already have it with them.
- UberEATS offers curbside pick up option only.
How Uber Works And How Uber Makes Money In The Delivery Business?
Before using the Uber platform to avail delivery services, the businesses need to either download the app to request the deliveries or integrate their IT applications with Uber using UberRUSH API. To come on-board, the delivery partners need to meet the eligibility criterion and install the delivery partner app to receive delivery requests and other information.
Here are the steps on how UberRUSH works and how the money flows.
- The business and the delivery partner need to come on-board first to use the Uber platform.
- The customer orders the product from a local business and pays the price of the product along with delivery charges.
- The business places the delivery pickup request with Uber.
- Uber broadcasts the delivery request to the delivery partners in the proximity of business location.
- A delivery partner who can take the delivery confirms the availability.
- Uber provides the information about the delivery partner to the business.
- The delivery partner visits the business location to pickup the delivery.
- The business provides the package to be delivered to the customer to the delivery partner.
- The delivery partner delivers the package at the drop-off location.
- The delivery partner provides a confirmation of the delivery to Uber.
- The business pays package delivery fees to Uber.
- Uber keeps its commission and pays the rest of the delivery fees to the delivery partner. Uber pays delivery partner on a periodic basis.
Uber Benefits For Businesses And Delivery Partners
Uber offers the following benefits to the local businesses:
- An ability to offer convenience and faster delivery to their customers
- Low delivery costs and zero overhead
- Real-time tracking to know exact location of Uber delivery partners. This visibility helps assure smoother pickups and deliveries.
- Integration of UberRUSH with their existing IT applications and infrastructure
Uber offers following benefits to its delivery partners:
- Flexible timings. Uber delivery partners can work when they want to work and how much they want to work.
- Choice of vehicle. Uber delivery partners can deliver either on a car or on a bike.
- Timely payments. Uber makes payments to the delivery partners every week directly into the driver’s bank account.
Uber is not a public company yet. So, there is no reliable information available on Uber revenues and profits. Uber has been raising funds from VCs and private equity investors to grow the company operations. As per Crunchbase, Uber has raised $10.6 billion so far from 15 funding rounds. Several news sources say Uber current valuation to be over $60 billion, making it the most valuable unicorn in the world.
Lyft vs Uber — What Are The Differences For Drivers? (Part 2: $$$ + Electric Range Issues & Support)
Editor’s Note: Cynthia has just begun driving for Lyft and has been driving for Uber for 5 months. She is writing a series of articles about the difference — with links to all of them at the bottom of each article. None of the articles are comprehensive, of course, but hopefully the overall comparison from the series will be one of the most comprehensive comparisons out there.
I am a part-time driver for Uber and Lyft and rather new to both. I’m also not a normal driver since I drive an all-electric Nissan LEAF that gets 85 to 100 miles on a full charge around town. Information I provide here may not be 100% in line with what full-time or long-time drivers at Lyft and/or Uber experience. Earnings ability varies based on multiple factors, and I suspect driver location is a particularly large factor. It seems obvious that dense metropolitan areas offer more constants and the possibility of higher earnings (but also a higher cost of living).
In simple terms, YMMV.
Please add your own information in the comments under the article if you are a driver or you are highly informed on the topic and you can expand on the limited quality of my experience.
To date, my earnings from both Lyft and Uber seem similar. They both take 25% of my earnings, before tips.
Lyft drivers I got rides from in Miami — all of them — said that Lyft pays more. I think a year or so ago, Lyft drivers started with only 20% of their earnings being deducted. However, there are also incentives for driving more (which I’ll get to in the next section) and Lyft drivers can receive tips via the app. Lyft encourages tips via the app, whereas Uber discourages them by saying they are not necessary and not including the option in the app.
Also, as noted above, pay is tied to the price passengers pay (it’s 75% of the cost of a ride) — if Lyft riders are paying more than Uber riders, the drivers are making more.
I talked with Miami drivers who said they were happy with the $800 a week they made with Lyft. If they are working 40 hours a week, that’s $20 an hour, but it wasn’t clear how much they are driving. A Washington Post article found Uber drivers making $8.77 per hour in Detroit, $10.75 per hour in Houston, and $13.17 per hour in Denver.
None of this accounts for the costs to the driver — wear & tear on their cars, depreciation, insurance, etc. That’s just the revenue. And Lyft & Uber drivers don’t get health insurance, sick days*, or other normal employee benefits. That point sometimes gets glossed over when just looking at $/hour. (*As for sick days, though, at least with this style of employment, one will never lose the job for taking off. That is a plus.)
Both companies pay more at demand surges / prime times — hours of increasing rider requests and increasing fares. One of my riders with an $8–10 fare told me his fare for the same distance was $45 a few nights before when coming home from a bar at 2:00 am. Well, I personally miss all those surges since I don’t drive at those times, but people who only drove then could make a lot higher rate than I do.
The extra pay from surges varies, but here’s a general graph of the probability of surges from Lyft:
Uber surges have not been that helpful for me. Perhaps I keep missing them due to timing that conflicts with other work or with sleep. I wake at 1:00 or 2:00 am to see messages come in about high surges but go back to sleep, leaving the work for the young or night-owl drivers.
Dinner time downtown is typically a surging time on Friday and Saturday
I tried to catch the early morning surges and found issues with that system. Once, I turned my app on when it was clearly surging all around me. Since I was in the midst of red (indication of surging demand and prices), I figured I was going to make more money. I got a rider request and accepted it … but I did not get the surge pricing. The rider request I accepted came from an area just outside the surge area. The request was farther than typical for this busy area, so I ended up driving farther with normal pay. I suspect other more seasoned drivers did not accept the request because they understood that the request would only bring a normal fare. They waited for a surging price fare, while I did not.
Uber tells you to drive towards a surge. Every single time I did that, the surge was over when I got there, even though I was close. I feel that the surges are elusive and ghosting to a certain extent. I find the feature misleading at this point.
I started taking screenshots of the surges to prove there was one when I accepted a rider. Still, no success if the rider request comes from outside the surging area. I may just be missing the opportunity, which is hard to harness in a smaller urban area. Perhaps dense, busy metropolitan areas offer more chance at earnings in this way. I know one driver who does make more money at night with surges in St. Petersburg and Miami.
The drivers I talked to in Miami were driving 40+ hours. I think this is when Lyft does pay more, or rather, takes a lower percentage of the revenue. The idea for drivers is that, if you put in the hours, you will make more money. On the Lyft site for drivers, one driver points out that, “When it’s slow, people lose faith and go home. What I’ve found in this business is that it’s the law of probability. If you have patience and perseverance, you will get the Power Driver Bonus every time.”
The above Power Driver Bonus shows financial incentives for drivers who drive more, who respond to rider requests more often. I will share more about this as I drive more.
As far as efficiency goes, as well as time, which is money as well, my all-electric Nissan LEAF is great around town. I have wondered how other drivers made much money once they added in the cost of buying gas. However, I also realize they do not have to stop and charge up between every few riders. I do, because I’m afraid as soon as I don’t charge up to a full 100% charge, I’ll get a trip that is too far for the LEAF. There’s the possibility that I will get that rider who wants to go far out of town, or maybe not so far, but still too far.
Furthermore, a longer trip makes me lose time. The problem is, with these good longer fares out of town, I have very limited if any options for charging before returning to Sarasota. Even if I have plenty of charge to return to Sarasota, I have to get back there and charge for a while before taking more riders. That puts me in a spot of losing money. To be honest, driving for Uber has made me think a bit more about EV plug-in hybrids like the Chevy Volt. A Tesla would be wonderful as well, but I am not sure Uber or Lyft would support a Tesla car payment.
Now, I could easily accept a rider back to Sarasota on that return trip, but I can’t see where a rider is until I accept the request. How can I know when accepting a rider that they do not want to go further away from Sarasota? I don’t know until I pick the rider up. If I accept the rider, I am obligated to the trip. I might then be somewhere too far to drive safely back to Sarasota to charge. Uber and Lyft do not want drivers cherry picking — a driver cannot see the destination of a rider until the pickup is submitted — and I understand some reasons why, but this can hurt earning potential for drivers, especially electric car drivers.
One potentially helpful feature for all-electric drivers (and other drivers) exists in bigger metro areas, like St. Petersburg (a bit north of me, and where I sometimes am for other work). Uber offers a feature called Find riders towards a destination. It allows a driver to pick up only a passenger who is going toward the driver’s own destination.
This should be offered everywhere for all kinds of reasons, but it is not. Drivers sometimes may have to return home for children or show up at another job on time. This feature ensures the timely and convenient resolution of said issues, which is particularly helpful for those people who are driving longer hours.
The option also helps an electric car driver ensure they will get a rider on the way to a charging station and not one going out of range, so it is an especially EV-friendly application in that regard.
However, using this feature affects and limits earnings possibilities. It could actually lower a driver’s revenue. It doesn’t let you benefit from surge pricing — when you use the app, you can’t get a bonus rate from surge pricing.
Lyft offers a similar feature in all regions (smaller cities as well). The earnings potential is again limited with this feature, though, as a ride towards a destination cannot be used for any earnings increases (from high rider demand at “Prime Times” or in regard to rides that count toward becoming a “Power Driver”).
That is not very energy/environmentally efficient since it essentially discourages people from genuine or semi-genuine “ridesharing” — even though it does make actual ridesharing possible (as opposed to on-demand, app-based taxi service). Hopefully this option will become more lucrative as the software develops.
As it is it, this is not an especially earnings-friendly application. Still, it should be offered in out-of-town locations (cities other than your home city, including smaller ones — I would find it useful for trips from Nokomis back to Sarasota). It would make it possible to at least pick up an out-of-town rider if the driver could set the destination back to their home city. Overall, it might increase pay for some drivers if it allows them to squeeze in one more trip here or there.
Though, Lyft and Uber should consider that by taking earnings abilities away with this feature, they discourage electric car drivers as well as others from using it more.
I do have longtime experience in the field of customer service. From that, I want to say, hats off to Uber and Lyft riders. In my experience, they are diverse in all ways, more than I’ve met in any customer service job. I think this, in part, is due to the broad advantage of this service to so many people, and part of that broad advantage is the relatively low cost. Of course, the flip side of low cost is relatively low pay — something to keep in mind.
Uber hopes to silence critics with more UK driver benefits
Uber has long argued that its drivers are independent contractors, not employees. While that distinction has been argued in the courts, the company has been upping driver perks to try to keep them on side and silence critics. Its latest effort in the UK is a partnership with the Association of Independent Professionals and the Self Employed (IPSE). For £2 per week, Uber drivers can sign up for IPSE benefits which include sickness and injury cover up to £2,000, jury cover up to £2,000, access to financial advice and support, and occupational accident cover up to £300.
Uber says it's making "a significant contribution" to the scheme, and that the benefits are worth £8 per week. IPSE offers two plans for regular members in the UK -- a standard membership for £154.73 (plus VAT) per year, and a premium "Plus" version for £247.65 (plus VAT) per year. The one offered to Uber drivers is "entirely different," however, and therefore "you can't compare them," a spokesperson for IPSE told Engadget. The scheme will, however, be offered "more widely later in the year," which could indicate how much money Uber is putting towards the initiative.
The IPSE partnership follows a flurry of Uber driver perks announced back in February. These include FlexPlay, which gives drivers the option to bank their earnings "early" in the week, earning advice sessions and a 12-month premium subscription to language learning app Busuu.
These additions have been overshadowed, however, by a deluge of controversies at the company. These include a messy legal dispute with Alphabet's Waymo division, a long list of executive departures, the revelations around "Hell," a program designed to track drivers who also work for Lyft, a crash involving one of its self-driving cars, a "Greyball" initiative designed to mislead law enforcement agencies -- the list goes on and on. Luckily we've put together a timeline so you can keep track of it all.