How do Uber make money? | DS MEDIA

How do Uber make money?

  Sam Guna   Oct 04, 2015   Uncategorized   0 Comment

Uber and similar ridesharing companies make money by charging clients for rides in vehicles it provides for transport, much like a taxi or other transport-for-hire company.

A ridesharing company is a service that organizes a shared ride, which may occur either on a one-time basis or as a recurring route. Uber, launched by entrepreneur Travis Kalanick, began as a smartphone application. Clients often make use of new technology, including smartphones, to request a ride from their current location. Drivers for this company utilize GPS or similar navigational technology to locate clients and determine the best route to both retrieve these clients, and to deliver them to their desired destinations. The driver then picks up the clients from their predetermined locations. These clients then share a ride in the vehicle as they are driven to their requested drop-off locations.

A network service is used to arrange the various elements involved in this service. Driver payments and ride matching are instantaneously handled using an optimization algorithm, which is a tool that lists all necessary information, organizes it, and sorts it accordingly to provide the most efficient use of time and fuel, as well as to make the ride as pleasant as possible for the clients. This real-time ridesharing makes use of seats that are not filled in vehicles, cutting down on the cost of transportation and lowering the use of fuel. It also is noted for being able to cover areas where public transportation is unavailable or limited. As a whole, the ridesharing service is considered to be effective in decreasing vehicle traffic, cutting down on congestion and reducing the impact that traffic and fuel consumption causes to the environment. All of these factors have made companies such as Uber popular with environmental groups.

Uber is a premier ridesharing company based in San Francisco. The company’s smartphone application allows its clients to view the progress of their reserved vehicles as they travel to them. Initially, Uber offered only full-sized luxury vehicles. Then, in 2012, it initiated UberX, a program that began offering smaller vehicles for clients to request.

Uber makes its money primarily by charging clients for their rides, much the same as a taxi, although it also derives advertising revenue from its website. Unlike a taxi service, the hiring of the driver/vehicle and the payment for the reserved ride is handled entirely through Uber rather than with the driver. Once the Uber vehicle travels at a speed greater than 11 mph, price is calculated by distance. At any lower speed, the price is calculated on the basis of time. The total cost of fare, less any gratuity (Uber doesn’t require tipping), is billed directly to the client’s credit card.

Uber is known for its high prices. It contends that these prices reflect the service provided, which offers a timely and reliable ride in comfort and style. During times of increased demand, such as holidays or severe weather, Uber institutes surge price fares that attract drivers and increase the company’s overall revenue, servicing clients who are in need of transportation that is otherwise unavailable.

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