How does Uber make Money?

1,013 Views Updated: 12 Aug 2017
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How does Uber make Money?

Gone are the days when getting a cab was a Herculean task. Launched by Travis Kalanick, a smart phone based cab service is one of the most popular means of commuting nowadays. Quite a convenient way to book a cab, Uber allows you a cab travel with just a tap on your phone.

Although Uber makes money by primarily charging for the rides, there are various other ways by which the application based cab service earns its profits. Along with some details on the Uber revenue model, here is your answer to how does Uber make money

Uber Business Model

Providing over one million cab rides every day, Uber’s business and revenue model is unique in nature. Not only does Uber offer more ride options to suit the needs of passengers, it has also introduced a surge pricing feature in its application. The business model of Uber is quite dependent upon the percentage of commission it gets from the total fare of a ride, which in turns depends upon factors like when was the service first launched or when did the driver join the company.

Uber Business Model

(Image Courtesy: Quora)

How Does Uber Make Money

#1. Surge Pricing

At the times when the number of cabs available is quite less than the number of people who are searching for Uber cabs, the prices of the ride tend to undergo a hike. This phenomenon is known as surge pricing, and it helps Uber to a great extent in earning profits.

Surge Pricing uber

(Image Courtesy: Uber Manila Tips)

#2. Car Type

Uber offers rides in various types of cars like SUVs, compacts, and sedans. These cars have varied price range based on their waiting time, base fare, and per KM charge. Some of these cars have a higher fare as compared to the other. This eventually means more profits for Uber.

Car Type uber

(Image Courtesy: Next Juggernaut)

#3. Travel Options

Not only does Uber have more car types, but it also offers you different options to travel. These may include carpooling and even Uber bikes. These travel options have only added on to the number of passengers that the cab service gets and helps it earn more profits.

Travel Options uber

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#4. UberEATS

Uber has not restricted itself to picking and dropping passengers. It has efficiently launched new services where they also deliver food at your doorstep. This service is popularly called UberEATS and has helped the company in generating more profits.

UberEATS

(Image Courtesy: Uber Eats)

#5. Trip Cancellation

It often happens that you need to cancel your ride the last minute. This, of course, comes with a trip cancellation fees. Since it is a regular phenomenon, it only implies more profits for the online cab service.

Uber Trip Cancellation

(Image Courtesy: Ride Share  Connection)

#6. Advertising Revenue

Besides its basic car service and lucrative options associated with it, Uber also generates revenues from the advertisements that are there on its websites and application. Given its popularity, Uber has been making a decent amount of profits from advertisements.

Advertising Revenue of uber

(Image Courtesy: Business Insider)

We would love to hear from you. Feel free to drop in your valuable inputs on the Uber business and revenue model. Kindly use the comment box to share your thoughts and opinions with us.

(Featured Image Courtesy: Tehelka)

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