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Why is Uber cheaper than Taxi?
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The Guru Take
Many factors. Primary reason? Uber sets it lower.
I could list many factors why one business charges less than another. Let's try it with Uber. One could argue they better business efficiency, where each driver waits less between each ride. Another may say they keep costs lower by the automation of dispatch. We can list a bunch.
However, most likely reason is that Uber is artificially setting the price lower than taxis, in order to increase user adoption and promote growth. Remember that Uber operates on a net loss, and they can continue to do so while leveraging investors' money. Hence, Uber does not have to set their price with the goal of turning a profit. At least not yet.
While taxi companies must make profits in order to continue operating, Uber does not. I personally cannot comment on why the prices are set to where they are (i.e. what Uber's reasoning is), but I can say that if they do not have to make a profit, they can be more aggresive on the pricing to take down an existing business like the taxis.
Comments
Uber is always losing money. They are working at a loss and they are far from making profits. It's all on borrowed money.
How can taxis compete with that...
Nope. Completely predatory. Once all taxi drivers are gone, then Uber will raise their prices.
While I agree, remember Uber invests in new technologies like autonomous vehicles and future businesses like UberEats. So, it's difficult to say how much of the loss comes from their actually running a rideshare business.
Yeah, but the fact that other ridehare services try to compete but keep shutting their doors pretty much prove that at the current cost model, rideshare companies cannot make a profit.
I mean...does anyone know whow Lyft is doing? I guess they are highly leveraged as well with big backers.
That's the thing about private companies. We don't know how much money they are making.
You can't be saying Lyft is making money, are you? LOL.