How Uber Works? Know About Uber Business Model and Revenue Model

Uber’s business model is an on-demand transportation service that has revolutionized the cab industry worldwide. Uber has made it possible to book a cab just by using your smartphone sitting anywhere. As you place your order, the cab arrives at your location and takes you to the desired destination which is a hassle-free service. Thus, it reduces your waiting time to a great extent. Uber has spread its network to 70 countries and created a global user base. It has been valued over $70 Billion and received an equity funding of $11.56 Billion. This valuation indirectly depicts the trust of shareholders in the Uber’s business model. Thus, it is easier to imagine the amount of revenue Uber will generate after attaining liquidity. For a deeper insight into the business model of Uber, keep reading till the end. 

Unknown Facts on Uber’s Revenue Generation Model:

Traditional cabs collect cash from passengers when each ride is completed. Uber follows the same principle and doesn’t have any other source of revenue till date. However, Uber offers around one million rides per day. Thus, you must dig a little deeper to understand its revenue model. 

1. Different Cab Models 

Uber doesn’t work with a single segment of cars or people. UberX and Uber Black cater to those who love to travel in black cars. Similarly, Uber Taxi is a cost-efficient solution for the middle-class group. Again, Uber SUV caters to the rich class people who want to maintain status. 

2. Revenue Streams

Uber follows a surge pricing technology for generating revenue. As per Uber’s pricing strategy, the per-mile cost increases with demand. Moreover, the price depends upon the number of drivers available and number of requests that were made. 

3. Other Uber Rides

Uber has diversified its business and entered the industry of food delivery, grocery delivery, goods delivery, self-driving cars, and other forms of transportation such as trucks, helicopters, etc. But, all services aren’t available in every geographical location. All these product lines add new streams of revenue to the business model of Uber. 

Value Propositions

Uber works for the mutual benefits of its customers and drivers.

Uber Business Revenue Model

Customers

  • Reach their required destination on time. 
  • Free rides on certain occasions and discounts for existing customers. 
  • Lesser price than normal taxi fares. 
  • Customers can redirect the driver and drive in their own style. 
  • Fixed prices for common places like airports. 

Drivers

  • An additional source of income and easy payment procedure.
  • Drivers can work part-time and have the freedom to reject a ride.
  • People can earn money by exploiting their hobby(driving). 
  • Drivers are paid online regardless of customer requests. 

Uber for Kids and Senior Citizens

Uber has paid special attention to kids and the aged group. The working parents can rely on Uber for their kids reaching home safely. 

Statistics state that 30 to 40% of the total rides comprises of senior citizens. Thus, Uber has come up with good features to attract senior citizens. 

Growth Model of Uber

The growth model of Uber shows how does it find its customers. It get’s the customers by offering the following advantages:

  1. Incentivize both the drivers and customers. 
  2. Uber is a big brand and thus gets many customers every day. 
  3. Rock-solid processes or playbooks have evolved by launching Uber in 311 cities. 
  4. Customers first come from local advertising channels newspapers, radio, and online advertising. Then, the customer base expands through the Word of Mouth. 
  5. Uber has removed all problems associated with local taxis. 

Cost Structure

  • Technological infrastructure
  • Salaries to permanent employees
  • Launch events and marketing expenditure

Key Activities

  • Product development and management
  • Advertising and customer acquisition
  • Hiring drivers
  • Managing driver payouts
  • Customer Support

Customer Relationship

  • Social Media
  • Customer Support
  • Review, rating and feedback system

Channels

  • Websites
  • Mobile App for Android
  • Mobile App for iOS 

Key Partners

  • Drivers and cars
  • Payment processors
  • Map API providers
  • Investors

4 Step Model on the Overall Working of Uber:

Uber follows the fours steps as discussed below:

Request a Cab

Uber persuades customers to avail of a ride in the first step. People need a smartphone to request a cab instantly or schedule it for a later time. 

Matching

As soon as Uber receives the service request, it sends the details to the nearest driver. Now, the cab driver can accept or reject the ride. In case he rejects the ride, the notification is sent to another driver in that area. 

Ride

Customers are allowed to track the cab when it is arriving at his location. Moreover, the ETA is available for the convenience of the customer. The meter starts only after the customer rides the cab. The customer side app tracks the meter for the particular cab. 

Payment and Rating

After completing the ride, the customer gets a notification to rate the driver. Customers are requested to rate drivers so that the rating serve as testimonials for new customers. 

Uber Business Revenue Model

Get in Touch with Us to Create a Successful Business Model Like Uber:

We have discussed how Uber works and generates revenue for its business. Therefore, connect with us for further business model analysis of Uber. You can talk to us regarding Uber’s profit model or business structure as well.  Uber’s business strategy has become successful after thorough research. If you are planning to ply cabs on the road, then our experts at UAE Website Development Dubai will guide you in the best way possible. Moreover, we have app developers who can help you to create a model app like Uber. In addition, we can guide on how to build a taxi app, the cost of developing such an app, how to start a business like Uber. Whatever is your query, connect with us at our Helpline Number:0507077947.

Uber Business Revenue Model

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