How does the Uber model work?

1,656 Views Updated: 07 Dec 2016
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How does the Uber model work?

Uber is an app based taxi fleeting company that connects drivers and riders. It builds an awesome platform in a way that people of interest will be optimized when using this platform. What has made Uber so successful is the fact that the way in which their model functions is simple and unique. Uber model’s primary components are its company, consumers and drivers. Apart from these, it also includes payment processing services and maps API providers. Uber model’s value proposition refers to constant contact with the consumers and partnership with the drivers with no direct employment.

Uber model reduces wait times and increases cab reliability for consumers. It standardizes the prices of cab rides as compared to those of unorganized sector and supports hassle-free payment for rides through the use of card or wallet. Uber model increases income to drivers as there is constant stream of ride requests for drivers instead having them to wait around for a consumer. It provides flexible working hours so as to drivers can choose their own work timings and allows them to elsewhere during off hours and earn extra.

Uber believes in revenue maximization, rather than profit maximization. Uber model takes a percentage of the total amount paid for transportation services provided by Uber's drivers. The larger the gross amount paid for transportation services provided through Uber's network, the higher Uber's revenue.

For instance, when a trip takes places the rider pays a certain amount for the trip to the company. The company collects the amount and then pays the driver the amount deducting 15% -20% as its commission. It's a win-win-win business model, where the rider gets a taxi at the least possible rate, the company generates cash flows due to the trip commission and the driver gets highly paid. Finally, Uber model is execution, not just an idea.

Posted by: jyoyadav96 Posts: (23) Opinions: (1) Points: 4,135 Rank: 28

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