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Uber Cost Estimation: What You Need to Know Before Requesting a Ride
Are you planning to take an Uber ride but not sure about the cost? Uber provides an estimated cost of the ride before you request it, which can help you plan your budget accordingly. In this article, we will discuss everything you need to know about Uber cost estimation.
How does Uber estimate the cost of a ride?
Uber calculates the cost of a ride based on various factors such as distance, time, traffic conditions, and demand for rides in the area. The company uses real-time data to determine the most efficient route and estimate the fare for your trip. The estimated fare also includes additional charges such as tolls and surcharges.
How accurate is Uber’s cost estimation?
Uber’s cost estimation is based on real-time data and algorithms that take into account various factors that affect the ride’s price. However, keep in mind that these are just estimates and not guarantees. The final fare may differ from the estimated fare due to factors such as changes in traffic conditions or if you make additional stops during your trip.
Tips for using Uber cost estimation
To get an accurate estimate of your Uber ride’s cost, make sure to enter your pickup location and destination correctly. You can also use the “Fare Estimate” feature in the app to get an idea of how much it will cost before requesting a ride.
Additionally, if you want to save money on your ride, consider using Uber Pool or sharing your ride with others going in the same direction. This can significantly reduce your overall fare.
In conclusion, Uber’s cost estimation tool can be helpful when planning your transportation budget. While it is not always 100% accurate due to external factors such as traffic conditions or making additional stops during your trip, it still provides a good idea of how much you can expect to pay. By following the tips mentioned in this article, you can use Uber cost estimation to your advantage and make informed decisions about your transportation needs.
This text was generated using a large language model, and select text has been reviewed and moderated for purposes such as readability.
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Uber Business Plan Template
Written by Dave Lavinsky
Uber Business Plan
Over the past 20+ years, we have helped over 1,000 entrepreneurs and business owners create business plans to start and grow their businesses. On this page, we will first give you some background information with regards to the importance of business planning. We will then go through an Uber business plan template step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
What Is a Business Plan?
A business plan provides a snapshot of your business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start an Uber business, or grow your existing business, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your business in order to improve your chances of success. Your business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Uber Businesses
With regards to funding, the main sources of funding for an Uber business are personal savings, and credit cards. Personal savings and bank loans are the most common funding paths for Uber businesses.
Finish Your Business Plan Today!
How to write a business plan for an uber business.
If you want to start an Uber business or expand your current one, you need a business plan. Below we detail what should be included in each section of your business plan.
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of Uber business you are operating and its status. For example, are you a startup, do you have a business that you would like to grow, or are you operating businesses in multiple markets?
Next, provide an overview of each of the subsequent sections of your plan. For example, give a brief overview of the Uber industry. Discuss the type of Uber business you are operating and your business model. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing plan. Identify the key members of your team. And offer an overview of your financial plan.
In your company analysis, you will detail the type of business you are operating.
For example, you might operate one of the following types of Uber businesses:
- Uber Green : this type of Uber uses electric vehicles.
- UberX: this type of Uber provides rides for 1-3 customers in a car.
- UberXL: this type of provides rides for groups up to 5 in a minivan or van.
- Uber Delivery: this type of Uber provides local deliveries, of food ordered via the Uber Eats platform, or of packages under 50 pounds.
- Uber Freight: this type of Uber hauls freight over long distances, choosing which loads to haul via the Uber Freight platform
In addition to explaining the type of Uber business you will operate, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What is your Uber business model? How will you make money using Uber?
- What milestones have you achieved to date? Milestones could include the number of persons assisted, the prestige of clientele served, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
In your industry analysis, you need to provide an overview of the Uber industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the Uber industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your strategy, particularly if your research identifies market trends.
The third reason for market research is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section:
- How big is the Uber industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential market for your Uber business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
The customer analysis section must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: individuals, groups, and manufacturers.
As you can imagine, the customer segment(s) you choose will have a great impact on your business. Clearly, your business structure would be far different for freight than for individual rides, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, include a discussion of the ages, genders, locations and income levels of the customers you seek to serve. Because most Uber businesses primarily serve customers living in the same city or town, such demographic information is easy to find on government websites.
Psychographic profiles explain the wants and needs of your target customers. The more you can understand and define these needs, the better you will do in attracting and retaining your customers.
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Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other Uber drivers.
Indirect competitors are other options that customers have to purchase from that aren’t direct competitors. This includes individuals who have their own car, or drive a rental car, or independent trucking companies.
With regards to direct competition, you want to describe the other Uber drivers with which you compete. Most likely, your direct competitors will be Uber drivers located very close to your location.
For each such competitor, provide an overview of their businesses and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- Do they specialize in specific services (i.e. luxury transportation, courier services, etc.)?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide a wider range of services?
- Will you offer greater convenience, such as early morning and/or late night hours?
- Will you provide any in-car amenities, such as mints or bottled water?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For an Uber driver, your marketing plan should include the following:
Product : In the product section, you should reiterate the type of Uber that you documented in your Company Analysis. Then, detail the specific products you will be offering. For example, in addition to cross-town trips, will your Uber business provide rides between cities?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your marketing plan, you are presenting the services you offer and their prices.
Place : Place refers to the location of your Uber business. Document your location and mention how the location will impact your success. For example, will your car or fleet be centrally located, to capture the greatest market share? In this section, discuss how your location will affect the demand for your services.
Promotions : The final part of your Uber marketing plan is the promotions section. Here you will document how you will drive customers to your location(s). The following are some promotional methods you might consider the following marketing campaigns:
- Advertising in local papers and magazines
- Reaching out to local websites
- Signs and billboards
- Social media marketing
- Local radio advertising
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your business, including getting regular oil changes, cleaning the interior after each customer, washing the exterior regularly, purchasing water/mints, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to complete your 1,000 th ride, or when you hope to reach $X in revenue. It could also be when you expect to launch in new markets.
To demonstrate your ability to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing Uber businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act like mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in passenger transportation, or successfully running small businesses.
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
Income Statement : an income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenues and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you give 10 rides per day, or 20? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets : Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your Uber business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a bank writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement : Your cash flow statement will help determine how much money you need to start or grow your business, and make sure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a business:
- Office build-out including fixtures, construction, etc.
- Cost of buying or leasing a company vehicle
- Cost of office supplies such as software
- Payroll or salaries paid to staff
- Business insurance
- Taxes and permits
- Legal expenses
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your car or fleet specs, or an overview of all the amenities or services you provide.
Putting together a business plan for your Uber business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will really understand the Uber industry, your competition, and your customers. You will have developed a marketing plan and will really understand what it takes to launch and grow a successful business.
Uber Business Plan FAQs
What is the easiest way to complete my uber business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily complete your Uber Business Plan.
What is the Goal of a Business Plan's Executive Summary?
The goal of your Executive Summary is to quickly engage the reader. Explain to them the type of Uber business you are operating and the status; for example, are you a startup, do you have an Uber business that you would like to grow, or are you operating a chain of Uber businesses?
Don’t you wish there was a faster, easier way to finish your Uber business plan?
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Uber business model explained: from start to finish.
By Nitin Lahoti In Blog Posted January 2, 2019
What Is Uber’s Business Model? How Uber Works? How Does Uber Make Money? What Is Uber’s Business Strategy? Why Is Uber so Successful?
These are some of the major questions any budding entrepreneur in the on-demand startup space would be curious about, before working on his/her own “Uber for X” business model.
And, rightly so.
Uber’s business model has turned out to be so successful and popular that it has fuelled a new startup economy, the “on-demand economy”.
Having a deeper understanding of Uber’s on-demand business model can play a pivotal role in modeling your own on-demand startup business idea.
As a leading on-demand startup technology development partner, we want to share this knowledge with you through this comprehensive blog post.
Uber Basics – Facts, Figures, Founders & Fundings
Before drilling down into “Uber’s business model” or “How Uber makes money?”, let us gain knowledge about some basics and interesting facts about Uber – from inception to being a multi-billion dollar startup.
Did you know that Uber was initially called as UberCab?
Originally, the app only had the option to hail a black luxury car.
Founders – Garrett Camp, Oscar Salazar, Travis Kalanick
Founding Year – March 2009
Headquarters – San Francisco Bay Area, U.S.A
Legal Name – Uber Technologies Inc. (Crunchbase)
Total Funding – $24.2B (In 22 funding rounds as of Oct 2018, Crunchbase )
Major Investors – SoftBank Vision Fund, Tencent Holdings, Toyota Motor Corporation, and others.
Current Valuation – $120B (Source – Bloomberg )
Uber’s Business Model – How Uber Works?
Uber is no longer just the on-demand cab hailing service we used to know. It has dipped its toes into other territories as well – from Uber Eats (on-demand food delivery) to Uber Freight (on-demand trucking).
For the matter of simplicity, in this blog, we will focus on Uber’s core business of ridesharing – its business model and how it makes money?
To put it in simple words,
Uber works as a digital aggregator app platform, connecting passengers who need a ride from point A to point B with drivers that are willing to serve them.
“ Passengers ” generate the demand, “ Drivers ” supply the demand and “ Uber ” acts as the marketplace/facilitator to make this all happen seamlessly on a mobile platform.
Through its model, Uber has been able to generate strong value propositions for both passengers and drivers to get onboard on its platform and create disruption in the taxi/cab industry.
Uber’s Value Proposition for Passengers
- On-demand cab bookings (Convenient)
- Real-time tracking
- Accurate ETAs
- Cashless rides
- Lower wait time for a ride
- Upfront pricing
- Multiple ride options
Uber’s Value Propositions for Drivers
- Flexibility to drive on their own terms
- Better income
- Lower idle time to get new rides
- Training sessions
- Assistance in getting vehicle loans
- Better trip allocation
Uber’s Business Model Canvas – A Visual Snapshot
Click to Enlarge Image
Digging Deep Into Uber’s Revenue Sources – How Uber Makes Money?
At a high level, Uber makes money by taking a cut on each ride (shared or individual) from the drivers. However, as we do a detailed analysis we will found that Uber’s revenue model is more complex than just trip commissions.
Uber provides the drivers on its platform (also called as partners) with a robust supply of ride requests to accept, fulfill, and make income. While making a booking, the passenger pays Uber for the ride through the app. Uber then transfers the payment to the partner’s account after taking some amount of commission for doing the job of a broker (digital broker if you want to say so).
The commission rates may vary from 15-30 % depending on the market.
Dynamic pricing/ surge pricing is a novel concept that has been popularized by Uber and being adopted in other verticals as well, such as food delivery.
Whenever there is a higher demand for cabs than what can be served at that moment (for example, at the airport after a flight lands), the fare goes up based on a surge price calculation algorithm.
Some drivers move to the surge region to earn extra (increases supply) and some passengers opt to wait to get a ride (reduces demand). This way Uber is able to manage the demand-supply mismatch situation better.
Drivers make more money, Uber makes more money and customers spend more money (but get urgent rides).
Uber offers multiple ride options, from affordable hatchbacks to luxury sedans and SUVs. The profit margin for premium rides are much higher and helps Uber mint more money.
If a passenger cancels a ride after a certain time-frame, say five minutes, he/she is charged a cancellation fee.
Leasing to Drivers
Uber runs a vehicle leasing program in many of its target countries to help new drivers get onboard faster. Drivers have to pay an upfront security deposit for the vehicle and payments are automatically deducted on a weekly basis from the driver’s earnings.
Uber is a very popular app with millions of active users. This makes it a good option for brands to do promotions. Its current app interface pushes a feed style layout for intuitive content consumption. Over the period, it may go on to become a strong revenue source by becoming a channel for sponsored content.
Expanding Rapidly With New Business Verticals
As mentioned earlier above, Uber is now much more than just a ridesharing company. It is leveraging it’s underlying technology for cab bookings, like, optimal driver allocation, to new use cases as well.
These new businesses that Uber is building side-by-side have tremendous potential to generate revenue and fuel Uber’s grand ambitions.
Uber is betting big on on-demand food delivery and why not. It’s a logical step for Uber to tap into this enormous market as it aligns with its ridesharing business and helps it utilize its large fleet of drivers. Uber Eats was launched as a separate app in 2016 and is growing in popularity at a rapid rate.
Uber Freight is basically Uber for trucks. Uber launched its own on-demand trucking app in 2017 with the core idea of seamlessly matching shippers with carriers. If Uber can execute on its strategy to become the freight matching platform of choice, the revenue opportunities are also big.
Key Takeaways for Budding Entrepreneurs From Uber’s Business Model Analysis
Uber got a lot right in its journey towards becoming a pioneer in the on-demand industry today. It has seen its fair share of challenges over the period and been able to maneuver through most of them successfully.
It is a great testament of a tech startup that achieved success with a novel business model and smart execution.
Interesting Read: How to Build an App Like Uber?
Tech entrepreneurs and startups can learn a lot from studying Uber’s business case study. We have tried to make the job easy by putting down a list of key takeaways/ tips from analyzing Uber’s massive success.
Let’s check them out below.
Build Solutions for Real-world Problems
This is somewhat obvious but still needs to be mentioned first. You as an entrepreneur should identify real problems and figure out how technology can be leveraged to solve it, just like Uber used mobile technology to transform on-demand transportation.
Uber doesn’t rest on its laurels of being the first prominent rideshare app. Its founders understood really well that the competition will grow over time and they can only stay ahead through continuous product iterations. They keep adding new features to their passenger and driver apps, invest in new technologies and more.
Shoot for Scalability
Building a scalable business model is critical if you are to sustain your startup in the long run. Uber has built its platform in such a way that it is easy for it to expand to new markets and serve multiple users simultaneously with confidence.
Keep Overhead Costs Low
Run a lean business model that doesn’t require large infrastructural investments. Also, for building a tech startup, a skilled workforce is very crucial. This also adds up to your cost overheads in terms of high salary payments. One effective way to stay lean during the initial stages of your product development is by partnering with a third-party technology development company to build the MVP and overtime do in-house hiring.
The proliferation of the on-demand industry owes a lot to Uber and rightfully so. Uber’s success in many ways started a chain reaction with hundreds of on-demand/ Uber for “X” startups been launched after that and hopefully many more to come.
Specifically, in the on-demand transportation and logistics industry, the effect has been profound. We hope that our analysis of Uber’s business model will become a useful resource for upcoming on-demand startups.
Disclaimer : The information mentioned in this blog is based on the author’s own understanding of Uber’s business model. The facts and figures have been obtained from online research with appropriate credits given wherever required. Please use the information at your own discretion with no liability on the author or the firm.
Nitin Lahoti is the Co-Founder and Director at Mobisoft Infotech . He has 15 years of experience in Design, Business Development and Startups. His expertise is in Product Ideation, UX/UI design, Startup consulting and mentoring. He prefers business readings and loves traveling.
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Uber Business Plan Template
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Elevate your ride-sharing venture with our comprehensive Uber Business Plan Template, designed meticulously for aspiring entrepreneurs and businesses. This template provides a robust framework that guides through market analysis, financial planning, marketing strategies, and operational insights specifically tailored for the ride-sharing industry. Our user-friendly, adaptable model enables you to navigate through the competitive landscape, helping ensure sustainable growth and profitability. Ideal for startups and SMEs in the transport sector, it becomes an indispensable tool for a well-structured business pathway.
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Table of Contents
Starting an Uber business can be lucrative, but just like any venture, it demands a concrete business plan. As the world moves to a more digital-first approach, the demand for ride-sharing and food delivery services like Uber continues to soar. This article will provide a comprehensive template to guide budding Uber business enthusiasts.
Our Uber Business Plan Template
A robust business plan acts as a roadmap. It pinpoints your destination (goals) and the path (strategy) you’re taking to get there. While many aspects go into a business plan, the key elements include understanding your business model, knowing your target customers, deciding on ride options, and understanding market trends.
Keys of Business Plan
The executive summary offers a snapshot of your Uber business. It must be compelling and should provide an overview of the business model, highlighting how Uber drivers will be managed, how you intend to cater to different types of customers, and what makes your Uber business unique.
Mission and Vision
What is your vision? Where are you looking at yourself in the next 1 year or more? Vision tells about the company’s vision of what it wants to provide and where it wants to be in the next few years. Mission Statement is the shorter form of Vision. That is, what is the company currently doing to achieve its Vision?
What are the long-term and short-term objectives of the company? Objectives are the goals set by the company to achieve its Mission and Vision over a longer time period.
The problem statement identifies the problem or gap that the company is filling. This highlights the key areas in which the company is working on.
The solution gives detailed information on how the company is going to solve those problems that they have identified in the market. What benefits will they be providing to their customers and users of their platform?
Understanding your market is vital. Engage in a market survey to gather data. Delve into customer analysis: Who are your target customers? What do they want? Also, analyze the increasing demand for food delivery and how it affects your business strategy.
Every business has strengths, weaknesses, opportunities, and threats. By analyzing these, you can craft strategies to capitalize on strengths and opportunities while mitigating weaknesses and threats.
In a market dominated by Uber, Lyft, and other local competitors, where do you stand? A competitive analysis will provide insights into market share, customer relationships, and business strategies of competitors.
How do you plan to attract riders and drivers? Draft marketing plans considering market trends, types of customers, and the unique selling points of your Uber business. Remember, maintaining good relationships with Uber drivers is as essential as with riders.
Set clear, actionable milestones. Whether it’s acquiring a certain number of drivers, reaching a specific number of rides, or hitting a revenue goal, clear milestones help track progress.
Your financial plan should include an income statement, financial statement, and projections. Consider factors like the cost of capital, source of income, surge pricing, and cancellation fee.
Frequently Asked Questions
What is an uber business plan, and why do i need one.
An Uber Business Plan is a detailed document outlining the business model, strategies, and operations plan of an Uber business. It serves as a roadmap, offering clarity on the Uber business model, which involves managing Uber drivers, catering to target customers, providing varied ride options, and potentially delivery services. A robust business plan is essential to secure investments, understand market trends, and ensure your business structure is optimized for profitability.
How do I create a compelling executive summary for my Uber business plan?
A compelling executive summary emphasizes the unique aspects of your Uber business model, highlighting your strategies for driver recruitment, the types of customers you target, and your differentiation from competitors. Dive into your revenue model, touch on how you handle surge pricing and cancellation fees, and articulate your long-term vision, showing investors and stakeholders you have a comprehensive grasp of the industry and market trends.
What market research should I include in my Uber business plan?
Your Uber business plan should have a rigorous customer analysis derived from a market survey. This analysis would provide insights into different types of customers, their preferences for ride options, and the potential for autonomous vehicles. An industry analysis detailing market share, demand for food delivery, and the role of autonomous vehicles will further solidify your business’s potential. Recognize emerging market trends and detail how they influence your Uber business strategies.
What are the key components of a financial plan for an Uber-based business?
A financial plan for an Uber business must include an income statement, a financial statement, and projections for future growth. It should address how you’ll handle upfront pricing, potential sources of income like surge pricing, and factors affecting the cost of capital. Your financial plans should also elucidate the revenue model, addressing factors like cancellation fees and other potential streams.
How can I estimate the startup costs for my Uber business?
Estimating startup costs requires a detailed analysis of all potential expenses. This includes the cost of acquiring vehicles, onboarding Uber drivers, marketing plans, technology setup, and any regulatory compliance costs. Perform a Company Analysis, considering both fixed and variable costs, and factor in potential cost-saving measures, like introducing autonomous vehicles.
What strategies can I use to attract and retain Uber drivers for my business?
Building strong customer relationships is key, not just with riders but also with your Uber drivers. Offer competitive incentives, flexible work hours, and consider strategies that cater to the unique needs of each cab driver. Understand that they’re a crucial part of your business model and that their satisfaction directly impacts your business’s success.
What steps should I take to ensure regulatory compliance for my Uber business?
Regulatory compliance in the ride-sharing industry involves understanding regional laws, getting necessary permits, and ensuring both drivers and vehicles meet set standards. Keeping abreast of industry analysis can alert you to changing regulations. Also, consider consulting legal professionals familiar with the ride-sharing space.
How do I determine pricing and fare structures for my Uber services?
Determine pricing by conducting a competitive analysis, understanding your cost of operations, and gauging customer preferences through market surveys. Your fare structure should account for factors like surge pricing, distance, demand, and any promotional strategies you might adopt.
What marketing and promotional strategies work best for an Uber business?
Effective marketing plans for an Uber business often leverage social media, local partnerships, and rider discounts. Building customer relationships, offering referral incentives, and understanding the detailed preferences of your target customers can further enhance your promotional strategies.
What technology and software tools are essential for managing an Uber business?
Management tools that offer real-time tracking, efficient dispatch, fare calculation, and customer feedback are crucial. As the future leans towards autonomous vehicles, ensuring your technology is adaptable and scalable becomes even more vital.
How can I ensure the safety and security of both drivers and passengers in my Uber business?
Safety measures include thorough background checks for drivers, providing training sessions, and integrating emergency response features in the app. Regular vehicle inspections and promoting a culture of feedback can further elevate safety standards.
What insurance and liability considerations should I be aware of in the ride-sharing industry?
Understand the insurance requirements in your region. Most areas mandate liability insurance, comprehensive coverage, and potential additional coverage specific to ride-sharing.
What are the potential challenges and risks associated with starting an Uber business?
Challenges include regulatory hurdles, competition, and the need for significant initial investment. The industry’s dynamic nature, with evolving market trends and the looming introduction of autonomous vehicles, adds to the risk.
How do I develop a competitive analysis for my Uber business plan?
Competitive analysis involves understanding your competitors’ business strategies, market share, and strengths and weaknesses. Using this information, identify gaps in the market and areas where you can offer better value or services.
What are the growth prospects and scalability of an Uber-based business?
The growth prospects are immense, given the demand for ride-sharing and food delivery services. With technology advancements, especially in autonomous vehicles, scalability is vast. As urban areas grow, the need for such services will only increase, offering more opportunities for expansion.
Running a successful Uber business goes beyond just understanding the Uber business model. It’s about tailoring a strategy, understanding your market, and continuously adapting. With this template, you’re well on your way to charting a course for a lucrative ride-sharing or delivery service venture.
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How to Write an Uber Business Plan
Last updated on October 7th, 2023
Your executive summary is the first part of your business plan, but you usually write it last because it is a summary of all the important parts.
The point of your Executive Summary is to get the reader’s attention quickly. Tell them what kind of Uber business you’re running and what its status is. For example, are you a new business, do you have a business that you want to grow, or do you run businesses in more than one market?
Next, give an overview of each part of your plan that follows. For example, describe the Uber industry in a few words. Talk about the type of Uber business you run and how it works. Detail your direct competitors. Tell us about your ideal customers. Give a brief overview of your marketing plan. Find the important people on your team. And explain what your financial plan is.
In your business analysis, you will explain what kind of business you are running.
For instance, you could run one of the following Uber businesses:
- Uber Green is a service that uses electric cars.
- This kind of Uber takes between one and three people in a car.
- UberXL offers rides for groups of up to 5 people in a minivan or van.
- Uber Delivery : This type of Uber delivers food ordered through Uber Eats or packages under 50 pounds in the local area.
- Uber Freight: This type of Uber transports freight over long distances. The Uber Freight platform is used to choose which loads to transport.
In the Company Analysis section of your business plan, you need to explain what kind of Uber business you will run and give some background on the company.
Include answers to things like:
- When did you start your business, and why?
- How do you make money from Uber? How are you going to make money with Uber?
- What important steps have you taken so far? Milestones could be things like how many people were helped, how well-known the clients were, etc.
- Your legal structure. Are you set up as an S-Corporation? An LLC? A single-person business? Tell us about your legal structure.
In your industry analysis, you need to give a general picture of the Uber business.
Even though this may seem pointless, it has more than one use.
First, learning about the Uber industry makes you smarter. It gives you a better idea of the market you are in.
Second, market research can help you make your strategy better, especially if it shows you market trends.
The third reason to do market research is to show your readers that you know a lot about your field. You do just that by doing the research and putting it in your plan.
In the industry analysis section, you should answer the following questions:
- How much money is the Uber business worth?
- Is the market going down or up?
- Who are your main rivals in the market?
- Who are the main market suppliers?
- What changes are happening in the field?
- How fast is the industry expected to grow in the next 5–10 years?
- How big is the market that matters? That is, how big is your Uber business’s potential market? You can figure out such a number by figuring out how big the market is in the whole country and then applying that number to the population in your area.
In the customer analysis section, you need to explain who you serve and/or who you hope to serve.
Individuals, groups, and manufacturers are all examples of customer segments.
You can probably guess that the customer segment(s) you choose will have a big impact on your business. Clearly, the way you run your business would be very different for freight than for, say, individual rides.
Try to figure out who your ideal customers are based on how they look and how they think. In terms of demographics, talk about the ages, genders, locations, and income levels of the people you want to serve. Most Uber businesses mostly serve people in the same city or town, so it’s easy to find demographic information on government websites.
Psychographic profiles explain what your target customers want and need. The better you can understand and define these needs, the easier it will be to get customers and keep them coming back.
In your competitive analysis, you should list your business’s direct and indirect competitors and then focus on the direct ones.
Other Uber drivers are your direct competitors.
Indirect competitors are other places where customers can buy things that aren’t direct competitors. This includes people who drive their own cars, rent cars, or run their own trucking businesses.
Concerning direct competition, you should talk about the other Uber drivers with whom you compete. Most likely, the Uber drivers closest to you will be your direct competitors.
Give an overview of each of these competitors’ businesses and list their strengths and weaknesses. Unless you’ve worked at one of your competitors’ companies, you won’t know everything about them. But you should be able to find out key facts about them, such as:
- What kind of clients do they work with?
- Do they focus on certain services, such as luxury transportation, delivery services, etc.?
- How much do they charge (high, low, etc.)?
- What can they do well?
- What do they do wrong?
For the last two questions, try to answer them from the customers’ point of view. And don’t be afraid to ask the customers of your competitors what they like and dislike about them.
The last part of your competitive analysis section is to list the ways you are better than your competitors. As an example:
- Will you offer more types of services?
- Will you offer more convenience, such as opening early in the morning or staying open late at night?
- Will there be extras in the car, like mints or bottled water?
- Will you price things better?
Think about how you will do better than your competitors and write them down in this part of your plan.
Usually, a marketing plan has four parts: the product, the price, the place, and the promotion. As an Uber driver, the following should be part of your marketing plan:
Product: In the product section, you should restate the type of Uber that you wrote about in your Company Analysis. Then, give specifics about the products you’ll be selling. For example, does your Uber business offer rides between cities in addition to trips within the same city?
Price: Write down the prices you’ll be charging and how they compare to those of your competitors. In your marketing plan, the product and price sections are basically where you list the services you offer and how much they cost.
Place: This is where your Uber business is located. Write down where you are and how that will affect your success. For example, will your car or fleet be in the center of the market to get the most business? In this part, talk about how where you are will affect how many people want your services.
The last part of your Uber marketing plan is the section about promotions. Here, you’ll write down how you’ll get people to your location (s). Here are some ways to get the word out about the following marketing campaigns:
- Putting ads in newspapers and magazines in your area
- Contacting local websites
- Signs and billboards
- Social media marketing
- Local radio advertising
In the other parts of your business plan, you talked about your goals. In your operations plan, you talk about how you will reach those goals. Your plan for operations should have two separate parts.
Everyday short-term processes include all the things you have to do to run your business, like getting the oil changed regularly, cleaning the inside after each customer, washing the outside regularly, buying water/mints, etc.
Long-term goals are the goals you want to reach in the future. These could be the dates when you hope to complete your 1,000th ride or make $X. It could also be when you plan to launch in new markets.
To show that you can succeed, you need a strong management team. Showcase the backgrounds of your key players, focusing on the skills and experiences that prove they can help a company grow.
You and/or your team members should have managed Uber businesses before. If so, talk about your experience and skills. But also highlight any experience you think will help your business succeed.
If your team is missing something, you might want to put together an advisory board. A two-to-eight-person advisory board would help your business in the same way that a mentor would. They would help answer questions and give advice on how to plan. If you need to, look for advisory board members who have worked in transportation for people or who have run small businesses well.
Your 5-year financial plan should include a monthly or quarterly breakdown for the first year, then an annual breakdown after that. Your income statement, balance sheet, and cash flow statement are all parts of your financial statements.
A more common name for an income statement is a Profit and Loss statement, or P&L. It shows your income and then takes away your expenses to show if you made a profit.
You need to make assumptions in order to make your income statement. For example, how many rides will you give each day? 10 or 20? And will sales grow by 2% or 10% every year? As you might expect, the financial forecasts for your business will be greatly affected by the assumptions you choose. Do as much research as you can to try to make sure your assumptions are true.
Balance sheets show both your assets and your debts. Balance sheets can have a lot of information, but try to boil them down to the most important parts. For example, if you put $50,000 into building up your Uber business, you won’t make money right away. Instead, it is an asset that you can use to make money for years to come. Likewise, if a bank gives you a check for $50,000, you don’t have to pay it back right away. Instead, you will have to pay that back over time.
Cash Flow Statement: Your cash flow statement will help you figure out how much money you need to start or grow your business and make sure you never run out of cash. Most business owners and entrepreneurs don’t realize that you can make money but still go bankrupt if you run out of money.
When making your Income Statement and Balance Sheet, make sure to include some of the most important costs of starting or growing a business:
- Setting up an office, including furniture, construction, and other things.
- The price of buying or renting a company car
- The price of office supplies and software
- Payroll or wages given to employees Business insurance
- Taxes and licenses:
- Legal expenses
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Uber Driver Business Plan [Sample Template]
By: Author Tony Martins Ajaero
Home » Business ideas » Transportation Industry » Taxi
Are you about starting an Uber driver management company? If YES, here is a complete sample Uber driver business plan template & FREE feasibility report.
Since the emergence of Uber and other e – hailing taxi services business, quite a lot of business opportunities have sprung up in the niche and interestingly, one of such business opportunities is to run an independent business that manages drivers and fleet of cars under Uber.
You can decide to just recruit drivers for Uber and make available cars for them to ride, or you can serve as a middle – man between Uber and potential drivers.
It is important to note that starting a standard Uber business with over a handful of cars and drivers also needs a significant investment capital, solid planning, and concentration to detail in order to keep your business profitable. You are also expected to have done your feasibility studies and market survey before committing your capital in the business.
A Sample Uber Driver Business Plan Template
1. industry overview.
Uber driver services companies are known as taxi e-hailing software app services company and the business is under the taxi e-hailing software app services industry. A taxi e-hailing software app company provides comfortable and private transportation via automobiles for passengers.
This taxi service is not operated on regular schedules or routes like the usual buses or car that usually pick several passengers along the road.
Uber Technologies Inc. is an American multinational transportation network company (TNC) offering services that include peer-to-peer ridesharing, ride service hailing, food delivery , and a bicycle-sharing system. The company is based in San Francisco and has operations in 785 metropolitan areas worldwide. Its platforms can be accessed via its websites and mobile apps.
A recent statistic released in 2019 shows that Uber is estimated to have 110 million worldwide users, a 69.0 percent market share in the united states for passenger transport, and a 25 percent market share for food delivery. Uber has been so prominent in the sharing economy that the changes in industries as a result of it have been referred to as uberisation, and many startups have described their products as “Uber for X”.
A good percentage of Uber drivers use their own cars even though drivers can rent or lease a car to drive with Uber. Uber offers car rental or leasing via Getaround, Hertz, and Fair, and Uber and BYD Auto have a partnership to provide leasing of electric cars to Uber drivers in Chicago and New York City.
In order to qualify as a driver under Uber, you must meet some basic requirements for age, health, car age and type, have a driver’s license and a smartphone or tablet, and must pass a background check. In many cities, vehicles used by Uber drivers must pass annual safety inspections and/or must have an Uber emblem posted in the passenger window. Some cities also require Uber drivers to have a business license.
Uber drivers are considered independent contractors and not employees, though this has been the subject of lawsuits in several jurisdictions. Before drivers accept a ride, the app tells them if the ride will take more than 45 minutes. Uber has invested significantly in mapping technology.
The Uber driver app includes accommodations for hearing-impaired drivers. Drivers in the United States who open a checking account at GoBank by Green Dot receive a debit card that provides cash back for purchases at Exxon, Walmart, Sprint, Jiffy Lube, and Advance Auto Parts.
To verify identity and prevent drivers’ accounts from being compromised, a mechanism called “Real-Time ID Check” requires some drivers to occasionally take selfies when logging on to Uber.
The bottom line is that Uber is open to partnership with an independent company that can help them extend their market – share in the taxi e-hailing software app industry and you can leverage on this to start your own Uber taxi driver business in the United States of America.
2. Executive Summary
Alpha Plus® Uber Drivers, Inc. is a licensed and registered taxi e – hailing software app company that intends to manage drivers under Uber. We will be based in Miami Beach, Florida – United States of America and we will have active presence in other cities like Green acres City, Miami, Jacksonville, Clearwater, Tampa, Fort Lauderdale, North Miami, West Palm Beach, Palm Harbor, Deltona, Orlando, Palm Bay and Panama City et al.
We chose to operate in these cities because we know that our services will be in high demand due to the demographic composition of Florida. We are well trained and equipped with some of the finest taxi cab drivers and comfortable cars to service our clients irrespective of their social and financial status.
Our services will involve managing professional drivers and fleet of cars under Uber. Our aim is to offer only the above stated services, but we will not close our doors to diversification (additional services) as long as it does not affect our core services.
At Alpha Plus® Uber Drivers, Inc. we are passionate in the pursuit of excellence and financial success with uncompromising services and integrity which is why we have decided to start our own Uber driver service business. We are quite optimistic that our values and quality of service offering will help us drive Alpha Plus® Uber Drivers, Inc. to enviable heights.
We will be dedicated to establishing good business relationships with our clients giving them value for their money and reasons for them to hire our services over and over again. We are quite aware that in order to become the number one choice in our city, we must continue to deliver quality and highly reliable services.
We are open to the use of latest technology in the taxi e-hailing software app services line of business. No doubt our excellent customer service and the quality of services we offer will position us to always welcome repeated customers.
Our client’s best interest will always come first, and everything we do will be guided by our values and professional ethics. We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.
Alpha Plus® Uber Drivers, Inc. is owned and managed by Wilson Garry and his friend and business partner Allen Rooney.
They both graduated from University of California and are equipped with the required qualifications and experience to grow Alpha Plus® Uber Drivers, Inc. to favorable compete with leaders in the Taxi e-hailing software app services industry.
3. Our Products and Services
Alpha Plus® Uber Drivers, Inc. is a standard Uber driver company that is positioned to make profit and favorable compete with leaders in the industry and we are going to do all that is permitted by the law of the United States of America to achieve our business aims and ambition. Our services offerings are listed below;
- Recruiting, training and providing drivers for partners under Uber
- Managing drivers and fleet of cars for partners under Uber
4. Our Mission and Vision Statement
- Our vision is to become the number one Uber driver company in the whole of Florida with active presence in key cities all around the State of Florida.
- Our mission as a standard Uber driver company is to develop a highly successful, profitable business which provides reliable drivers and cars in our city and to become the standard for an ideal taxi e-hailing business not only in the State of Florida but also throughout the United States of America.
Our Business Structure
We are quite aware that the success of any business lies in the foundation on which the business is built on, which is why we have decided to build our taxi e-hailing software app company on the right business foundation.
As a matter of fact, we are set to build an Uber driver services company that will be the standard for the industry in the United States of America. We want to build a dedicated workforce that will ensure that our customers and partners are satisfied and they get value for their money.
We aware that it takes a business with the right employees and structures to achieve all what we have set to achieve, which is why we will be putting structures and processes in place that will help us deliver excellent services and run the business on autopilot.
With the wide range of our service offerings, we are expected to employ more than it is required to run a conventional Uber driver business.
Definitely, we will have various employees (full – time and contract staff) to man the various service offerings of Alpha Plus® Uber Drivers, Inc. Alpha Plus® Uber Drivers, Inc. will employ professionals and highly skilled people to occupy the following position;
- Chief Executive Officer
Admin and HR Manager
Marketing and Sales Executive
- Customer Care Executive / Front Desk Officer
5. Job Roles and Responsibilities
Chief Executive Office:
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results and developing incentives
- Creating, communicating, and implementing the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
- Responsible for fixing prices and signing business deals
- Responsible for providing direction for the business
- Responsible for signing checks and documents on behalf of the company
- Evaluates the success of the organization
- Managing our software and backend
- Responsible for installation, repair and maintenance of GPS car tracking device for the organization
- Responsible for writing and presenting reports, proposals, applications and contracts
- In charge of choosing the GPC car tracker components and software to be used and specifying the requirements for the project
- Adapting plans according to circumstances and resolving any problems that may arise during GPS car tracker installation and monitoring
- Monitor all our taxi that are plying different routes
- Responsible for overseeing the smooth running of HR and administrative tasks for the organization
- Design job descriptions with KPI to drive performance management for clients
- Regularly hold meetings with key stakeholders to review the effectiveness of HR Policies, Procedures and Processes
- Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
- Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
- Defining job positions for recruitment and managing interviewing process
- Carrying out induction for new team members
- Responsible for training, evaluation and assessment of employees
- Responsible for arranging travel, meetings and appointments
- Oversee the smooth running of the daily office activities.
- Identify, prioritize, and reach out to new partners, and business opportunities et al
- Identifies potential partners; follows up on development leads and contacts
- Writing winning proposal documents, negotiate fees and rates in line with company policy
- Responsible for handling business research, marker surveys and feasibility studies for clients
- Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
- Document all customer contact and information
- Represent the company in strategic meetings
- Help increase sales and growth for the company
- Responsible for preparing financial reports, budgets, and financial statements for the organization
- Create reports from the information concerning the financial transactions recorded by the bookkeeper
- Prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
- Provides managements with financial analyses, development budgets, and accounting reports
- Responsible for financial forecasting and risks analysis.
- Responsible for developing and managing financial systems and policies
- Responsible for administering payrolls
- Ensuring compliance with taxation legislation
- Handles all financial transactions for the company
- Serves as internal auditor for the company
- Serve as a professional driver for the organization by driving cars as assigned by the management
- Maintain a logbook of their driving activities to ensure compliance with federal regulations governing the rest and work periods for operators.
- Keep a record of vehicle inspections and make sure the cab is equipped with safety equipment
- Inspect vehicles for mechanical items and safety issues and perform preventative maintenance
- Comply with taxi driving rules and regulations as well as with company policies and procedures
- Report defects, accidents or violations
Client Service Executive/Front Desk Officer
- Welcomes guests and clients by greeting them in person or on the telephone; answering or directing inquiries.
- Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
- Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s products and services
- Manages administrative duties assigned by the manager in an effective and timely manner
- Consistently stays abreast of any new information on the company’s products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients
- Receives parcels / documents for the company
- Distribute mails in the organization
- Handles any other duties as assigned by the line manager
6. SWOT Analysis
Taxi e-hailing software app business cum Uber driver business is one of the many businesses that can easily generate sales with little stress. We are building a standard Uber driver business with plans to sell our franchise all across the United States of America and Canada which is why we have decided to subject our business idea (company) to SWOT Analysis.
Ordinarily we can successfully run a normal Uber services business without the stress of writing a detailed business plan, but because we intend becoming one of the leaders in the line of business we want to establish, we don’t have any option other than to follow due process.
We hired the services of Lardon Maxwell, an expert HR and Business consultant with bias in disruptive startups to help us conduct SWOT analysis for our company and she did a pretty job for us. Here is a of the result we got from the SWOT analysis that was conducted on behalf of Alpha Plus® Uber Drivers, Inc.;
The strategic locations we intend covering, the Business model we will be operating on, access to a pool of willing partners, ease of payment, wide range of highly reliable and comfortable cars, highly trained and courteous drivers and of course our excellent customer service culture will definitely count as a strong strength for Alpha Plus® Uber Drivers, Inc.
A major weakness that may count against us is the fact that for now, we don’t have the financial capacity and business structure to compete with Uber hence the need for us to work with them as an independent partner.
The fact that we are launching out in the heart of Miami – Florida, provides us with unlimited opportunities to market our services to a large number of professional drivers, business partners, corporate organizations, travel and tours agencies, hotels, government organizations, households et al.
We have been able to conduct thorough feasibility studies and market survey and we know what our potential clients will be looking for when they patronize our services; we are well positioned to take on the opportunities that will come our way.
A major threat that we are going to be confronted with is that as an independent business whose services is dependent on Uber, we might not have a say on how they run their business and they may decide to release policies that may adversely affect our business.
7. MARKET ANALYSIS
- Market Trends
The market for luxury services such as taxi and limousine services is driven by the growth of the economy and the increase in consumer spending – in essence, as the general economy of a country grows, more people will have enough financial resources to patronize luxury services such as making use of taxi cum Uber as against making use of public buses, and trains et al.
Besides, revenue generated by an Uber services company is driven by business and leisure travel. No doubt, the profitability of operators in this industry depends on good marketing and networking. Small taxi cab companies can effectively compete with large ones because there are few economies of scale in this line of business.
Research shows that the taxi cab and limousine services industry in the US is fragmented: the top 50 companies account for less than 35 percent of the total revenue generated in the industry.
Lastly, technology has indeed played a major role in this industry; especially in cutting cost and enforcing safety and monitoring measures. GPS car tracking device readily comes to mind. There is hardly any Uber services company that does not have GPS car tracker installed on all their cabs. It helps them in monitoring their fleets, drivers and also in planning and budgeting.
8. Our Target Market
Before choosing a location to launch our Uber services company, we conducted our feasibility studies and market survey and we were able to identify those who will benefit greatly from our service. Those who will benefit from our service offering are grouped into three and they are;
- Investors / partners who are interested in investing in Uber by making available fleet of cars to be managed by a company like ours
- Professional drivers who want to drive under Uber but don’t have their own cars
- Everyone who has the financial capacity to make use of taxi cabs / Uber.
Our competitive advantage
Taxi cab and limousine services business is an easy to set up business especially if you have the finance to acquire comfortable cars, attract drivers and the ability to run and manage a business. It means that the possibility of Uber driver businesses springing up where our company is located is high.
We are aware of this that is why we decided to come up with a business concept that will position us to become the leader in Miami – Florida.
We can confidently say that the strategic locations we intend covering, the Business model we will be operating on, access to pool of partners and investors, ease of payment, wide range of highly reliable and comfortable cars, highly trained and courteous drivers and of course our excellent customer service culture will definitely serve as competitive advantage for Alpha Plus® Uber Drivers, Inc.
For the time being, Alpha Plus® Uber Drivers, Inc. has no real competitors that can compete with the quality of services we offer. Our customer service will be customized to meet the needs of all our customers.
Lastly, all our employees will be well taken care of, and their welfare package will be among the best within our category (startups Uber services businesses in the United States) in the industry. It will enable them to be more than willing to build the business with us and help deliver our set goals and achieve all our business aims and objectives.
9. SALES AND MARKETING STRATEGY
- Sources of Income
Alpha Plus® Uber Drivers, Inc. is established with the aim of maximizing profits in the industry and we are going to ensure that we do all it takes to attract clients on a regular basis. We will ensure that we leverage on our strength and the opportunities available to us in the U.S. market to generate enough income that will help us drive the business to stability.
We will explore every available sources of income in the taxi e-hailing software apps industry. Below are the sources we intend exploring to generate income for Alpha Plus® Uber Drivers, Inc.;
10. Sales Forecast
One thing is certain, there would always be investors and drivers who would need the services of Uber companies. We are well positioned to take on the available market in Miami – Florida and we are quite optimistic that we will meet our set target of generating enough income / profits from the first six months of operation and grow our Uber driver business and our clientele base.
We have been able to examine the taxi e-hailing services software apps market, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast. Below are the sales projections for Alpha Plus® Uber Drivers, Inc. it is based on the location of our business and of course the wide range of related services that we will be offering;
- First Fiscal Year: $240,000
- Second Fiscal Year: $450,000
- Third Fiscal Year: $950,000
N.B : This projection was done based on what is obtainable in the taxi e-hailing software apps industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor offering the same services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.
- Marketing Strategy and Sales Strategy
The marketing strategy for Alpha Plus® Uber Drivers, Inc. is going to be driven by good returns on investment (ROI) for our partners, excellent customer service, honesty and quality service delivery. We will ensure that we build a loyal customer base.
We want to drive sales via the output of our jobs and via referral from our satisfied customers. We are quite aware of how satisfied customers and investors drive business growth especially businesses like Uber driver services. Alpha Plus® Uber Drivers, Inc. is strategically located and we are going to maximize the opportunities that are available which is why we spent more to locate the business in a location that will be visible to our target market.
Our sales and marketing team will be recruited based on their experience in the industry and they will be trained on a regular basis so as to be well equipped to meet their targets and the overall goal of Alpha Plus® Uber Drivers, Inc.
Our goal is to grow Alpha Plus® Uber Drivers, Inc. to become the leading Uber driver company in Miami – Florida which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force to reckon with in the taxi e-hailing software apps industry. Alpha Plus® Uber Drivers, Inc. is set to make use of the following marketing and sales strategies to attract clients;
- Introduce our Uber driver services business by sending introductory letters alongside our brochure to corporate organizations, travel and tour agencies, hotels, households and key stakeholders in all across Miami, Green acres City, Miami, Jacksonville, Clearwater, Tampa, Fort Lauderdale, North Miami, West Palm Beach, Palm Harbor, Deltona, Orlando, Palm Bay and Panama City et al
- Print out fliers and business cards and strategically drop them in offices, car parks, libraries, public facilities and train stations et al.
- Use friends and family to spread word about our business
- Post information about our company and the services we offer on bulletin boards in places like car parks, schools, libraries, and local coffee shops et al
- Place a small or classified advertisement in the newspaper, or local publication about our company and the services we offer
- Leverage on referral networks such as agencies that will attract drivers and partners who would need our customized services
- Advertise our Uber driver services company in relevant magazines, newspapers, TV, and radio stations.
- Attend relevant automobile expos, seminars, and business fairs et al to market our services
- Engage in direct marketing approach
- Encourage the use of Word of mouth marketing from loyal and satisfied clients
- Join local chambers of commerce and industry to market our services and attract partners.
11. Publicity and Advertising Strategy
Alpha Plus® Uber Drivers, Inc. is set to establish a standard for Uber businesses in Miami – Florida and throughout the United States which is why we will adopt and apply best practices to promote our business. Good enough, there is no hard and fast rule on how to advertise or promote an Uber driver services business.
The challenge is that most startup companies do not have the required money to pump into publicity and advertising. Here are the platforms we intend leveraging on to promote and advertise Alpha Plus® Uber Drivers, Inc.;
- Encourage our loyal customers (partners and drivers) to help us use Word of Mouth mode of advertisement (referrals)
- Advertise our business in relevant magazines, local newspaper, local TV and radio stations
- Promote our business online via our official website
- List our business on local directories (yellow pages)
- Sponsor relevant community programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, LinkedIn, twitter, et al to promote our brand
- Install our Billboards in strategic locations in and around Florida
- Direct coupon mailing approach
- Distribute our fliers and handbills in target areas in and around Miami – Florida.
- Advertise our company in our official website and employ strategies that will help us pull traffic to the site.
- Ensure that all our staff members and drivers wear our branded shirts and all our taxis are branded with our company logo
12. Our Pricing Strategy
Firstly, we don’t have the capacity to determine the price for this business since we are an independent partner with Uber; they are in the position to determine the price and the commission to pay per trip.
Secondly, since we will be managing a fleet of cars under Uber, we will ensure that we abide by the standard price range as regards leasing of cars over a period of time for our drivers who chose the lease option. For those who just want to drive under our scheme, we will pay them 40 percent of the earnings the car generates per day.
- Payment Options
The payment policy adopted by Alpha Plus® Uber Drivers, Inc. is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.
Here are the payment options that Alpha Plus® Uber Drivers, Inc. will make available to her clients and partners;
- Payment via bank transfer
- Payment with cash
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
In view of the above, we have chosen banking platforms that will enable our clients and partners make payment without any stress on their part. Our bank account numbers will be made available on our website and promotional materials to clients and partners who may want to deposit cash or make online transfer for our services.
13. Startup Expenditure (Budget)
From our market survey and feasibility studies, we have been able to come up with a detailed budget of establishing a standard Uber driver services company in Miami – Florida. These are the key areas where we will spend our startup capital on;
- The Total Fee for Registering the Business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits – $1,500.
- Marketing promotion expenses (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- Cost for hiring Business Consultant – $2,000.
- Insurance (general liability, comprehensive car insurance, workers’ compensation and property casualty) coverage at a total premium – $30,800.
- The cost of accounting software, CRM software and Payroll Software – $3,000
- The cost for leasing standard office facility with enough parking- $100,000.
- The cost for facility remodeling – $10,000.
- Other start-up expenses including stationery – $1000
- Amount needed for phone and utility deposits – $3,500
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $40,000
- The cost for Start-up inventory (fueling, car tracking devices and accessories) – $50,000
- The total cost for store equipment (cash register, security, ventilation, signage) – $13,750
- The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Credit card machine, POS, tables and chairs et al): $4,000.
- The cost of Launching a Website: $600
- The total cost for financing the acquisition of the first set of Uber – spec cars – $500,000
- The cost for our grand opening party: $15,000
- Miscellaneous: $10,000
We would need an estimate of $750,000 to successfully launch our Uber driver business in Miami – Florida.
Generating Funds/Startup Capital for Alpha Plus® Uber Drivers, Inc.
Alpha Plus® Uber Drivers, Inc. is a business that will be owned and managed by Wilson Garry and his friend and business partner Allen Rooney. They are the initial financiers of the business which is why they decided to restrict the sourcing of the startup capital for the business to just three major sources. These are the areas we intend generating our startup capital;
- Generate part of the startup capital from personal savings and sale of stocks
- Generate part of the startup capital from friends and other extended family members
- Generate a larger chunk of the startup capital from the bank (loan facility).
N.B: We have been able to generate about $200,000 (Personal savings $150,000 and soft loan from family members $50,000) and we are at the final stages of obtaining a loan facility of $550,000 from the bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.
14. Sustainability and Expansion Strategy
One of our major goals of starting Alpha Plus® Uber Drivers, Inc. is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to offer give our drivers and partners more than they can get elsewhere in terms of earnings and return on investment (ROI).
We are well prepared to survive on a low-level profit margin for a short period of time. Alpha Plus® Uber Drivers, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of.
Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.
As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of ten years or more. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
- Business Name Availability Check:>Completed
- Business Registration: Completed
- Opening of Corporate Bank Accounts: Completed
- Securing Point of Sales (POS) Machines: Completed
- Opening Mobile Money Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Acquiring facility with enough parking lots and remodeling the facility: In Progress
- Acquiring of cars and limousines: In Progress
- Conducting Feasibility Studies: Completed
- Generating capital from family members: Completed
- Applications for Loan from the bank: In Progress
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents and other relevant Legal Documents: In Progress
- Design of The Company’s Logo: Completed
- Printing of Promotional Materials: In Progress
- Recruitment of employees: In Progress
- Purchase of office furniture and appliances, software apps and IT gadgets : In progress
- Creating Official Website for the Company: Completed
- Creating Awareness for the business both online and in the neighborhood: In Progress
- Health and Safety and Fire Safety Arrangement (License): Secured
- Establishing business relationship with car dealership shops, Uber Technologies Inc., and other key stakeholders in the industry et al: In Progress
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Biz Model Canvas Uber
Uber is one of the most prominent digital platform businesses of the last decade.
Uber creates value by enabling and managing transport services provided by a supply side (drivers) and a demand side (riders). And Uber makes money by taking a commission of 25% on each such transaction. Their aggregate take rate (=commission) on Uber Mobility/Rides was between 23.5%-28.9% in Q1’22-Q1’23.
Uber Eats enables transactions between restaurants, drivers and takeaway diners. The revenue model and service charges are more complex in this case and have led to an aggregate take rate of 18.1%-20.6% in the same period.
The Sharing Economy
Uber falls into the sharing economy platforms. These monetise on physical assets owned by the supply side and/or services provided by them. Similar business models are used by transport platforms, urban mobility platforms, vehicle / ride sharing, mobility-as-a-service, food / goods delivery, service sharing, home sharing, things-on-the-go sharing and more. Hence knowledge you gain here will be transferable to many other areas.
This article is structured in line with the elements of the business model canvas:
Key Assets & Resources
Key activities, customer relationships, customer segments, cost structure.
Crucial key partners are the participants on the supply side:
Drivers: The drivers are on the supply side of Uber's business model and they can join or leave at a moment’s notice (or multi-home on an ongoing basis with other ride-hailing businesses). It is essential to have a sufficient number of them to be able to provide the customer proposition (timely pick-up at low cost). This is not just a static consideration but also at peak traffic times, when events are on, etc. Indirect network effects (crucial to the business model) do not kick-in without a critical mass of drivers. This fact is best demonstrated by the fact that Uber accelerates supply when they enter a new city. But it's broader than that. While sometimes underappreciated, drivers still have a choice to participate or not. It's a complex topic and it will be interesting to see what - as one example - will happen in the post-pandemic world. Competition over workers is intensifying: the scenarios outlined in this discussion from Aug 2021 have only further intensified as we know now a year one.
Restaurants: Like drivers, restaurants are essential and can join or leave at a moment’s notice. They, too, can multi-home using one of the many competitor meal-delivery offers (including on bike). It’s an ambivalent space due to the high commission that Uber takes. The importance of Uber Eats was highlighted during the covid crisis when Uber Rides basically collapsed while Eats soared alleviating the financial fallout (somewhat). Eats is also one of the biggest growth prospects, yet, this space is highly competed over. DoorDash is spending a lot of money on digital advertising. This can have a considerable impact on Uber. A really fascinating space to observe will be whether DoorDash's more specialised network effects on Dining will succeed or Uber's hybrid ones. Losing (or not being able to achieve potential) on UberEats, could affect the entire business model because it appears that there is more payout for riders on Dining platforms (this would be pretty bad new in a tight labour market),
Restaurants are one of the biggest new opportunities and key partners of Uber
Participants on the demand side are of course in the customer segments category of the biz model canvas
The next important tier of key partners are:
Commercial partners: Uber partners with a multitude of corporates and commercial partners. These types of partnerships differ and have different purposes (e.g. better pick-up/drop-off points, new channels to local markets, enhanced loyalty and more). Many of these partnerships are very important because they are not easy to replicate for some of the smaller competitors with a lesser recognised brand and customer base. These partnerships have grown considerably in their importance and are the area that has changed most in the last 3-4 years (apart from restaurant partner). Here are some examples:
Uber is partnering with hundreds/thousands of malls and attractions to become the preferred ride-share partner of the respective partner and then ease pick-up through defined pick-up points, this includes airports (which has been one of their biggest revenue generators), malls, attractions and more (one example: Universal Studios in LA ).
Many commercial partners for shared rewards and as an additional sales channel, e.g. Starwood Hotels & Resorts, American Airlines, Hilton Hotels, American Express, PayPal and Pepsi.
Loyalty program partners: e.g. collaborating with frequent flyer program provider: such as partnering airlines, tiered rewards programs or here Capital One in the US.
Lobbyists were more important at the earlier stages of the company in that there was an (albeit unlikely) risk of being banned or significantly curtailed. Lobbying work continues on a number of fronts (in particular the employment status of drivers). They can also be crucial for the trajectory of future innovations (in particular autonomous vehicles). We can also see that Uber has backlashes where lobbying is more difficult, esp in Europe.
Cities / communities: Are also very important for various aspects - we will elaborate a bit more in the customer relationship section to keep things more succinct here. But it is listed in the second tier of key partners for a purpose (ahead of tech partners!).
Learn more about key partners in digital business models here .
What's new in Uber's business model?
What's new in Uber's business model? Q3 2023 investor update
What's new in Uber's business model? Q2 2023 investor update
It is pointless to call out underlying technologies as key partners if all competitors have access to it. Yet, that is what you will find basically everywhere else listed first and as crucial (where you will read that AWS is a key partner of Uber - a saddening case of junk "insights"). Were the underlying technologies not present (maps, app stores, umm.. smartphones), then there would be no Uber (nor any of the competitors). What an insight, hey?
Technology partners: If the same technologies are accessible to all companies, including all of Uber's competitors, it becomes a non-distinguishing factor in terms of competition. A closer look reveals (to no surprise) that distinguishing differences are developed by Uber themselves. Therefore, these are to be listed among the key assets / resources. Two examples are the back-to-back routing algorithms and Uber's work on better pick-up/drop-off points for ExpressPool (since June 2022, this has been rebranded as UberX Share ). Nevertheless, there are always some leading-edge technologies that can play an important role in being able to provide better value propositions than competitors. For Uber, this is clearly in the space of AI / algorithms. But here too, insights that come from AI, are always based on questions asked by engineers and this then brings us back to key resources (being Uber's skilled engineers)
R&D Partners: R&D partners are those that collaborate with Uber on longer term business opportunities. One of the most important ones would be those on autonomous vehicles (AVs)
Other partners involved in the non-core value proposition or supporting activities, some examples are Hire car partners (Uber-ready vehicles), insurances, and partner on driver incentive programs (this is a long topic in itself that can be of considerable importance for the full-time drivers)
Investors/venture capitalists were crucial in the early days. Since their IPO, this is less relevant (though there have been post-IPO capital injections). Uber Executive will vehemently deny the lesser importance of investors these days. But the truth is that capital injections into R&D and growth via shares are simply rare. It rather goes into driving the share price (which is beneficial for the Execs but less so for the company's actual growth)
What you should know about Key Partners (and all other aspects of tech biz models):
No aspect of a business model is static and this includes the list of key partners. Granted, a few years ago, Uber's technology partners would have been on the list of their absolute crucial key partners. The standard technologies that are now accessible and copyable by basically any competitor and even relatively new startups are not a distinguishing and competition-deciding factor anymore. Uber is no longer predominantly fighting against Taxis but against other ride-hailing companies.
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Now that Uber has achieved considerable scale, there are three types of key activities: (a) operational excellence, e.g. safety ; (b) continued expansion to new countries and cities ; and (c) improve existing value propositions and develop entirely new ones.
From a platform business model perspective, most of these activities can also be categorised into reductions of search, transaction / post-transaction costs as well as enhancing positive network effects while reducing negative ones.
Some examples are:
Remove friction (search costs) from all interactions. This includes the many improvements around pick-up points , e.g. location accuracy , spotlight and many other (non-technological) ways
Remove negative experiences ( transaction costs ), e.g. bad behaviours / safety needs on both sides ( rider and driver ), e.g. through rating and other measures
Reduce safety risks which often come with the risk of negative coverage and can add to regulatory concerns
Improve the technical lead on the proprietary technologies
Improve the App as well as the involved processes based on user feedback
Keep participants engaged and stimulate ongoing participation . This can include external stimuli, such as providing rewards , promotions, notifications, etc.
Scale driver and customer side (in existing cities) to reduce idle times for drivers and waiting times for riders. This also includes keeping both sides in balance. One (unpopular) way of doing so is surge pricing
Expand and grow into more cities and countries
Continue improving the value proposition , e.g. cheaper rides for regular commuters through Uber Pool / Express Pool (now UberX Share) - see note below
Develop new products: Uber Eats, UberX Share, Uber Transit, Uber Taxi, Uber Freight and many other specific value propositions related to Rides and Eats
Add complementary value propositions (e.g. car financing, new customer segments, etc)
Develop, add to and refine the loyalty / rewards programs
Reduce churn on driver and rider side
Analyse the data to fine-tune everything
Find solutions to long-standing issues , driver dissatisfaction, criticism from cities and communities.
Note that Uber ExpressPool (previously UberPool) was suspended due to the pandemic. It has relaunched in June 2022 under the rebranded name UberX Share (so much better - isn't is?). We believe this is one of the larger opportunities among the current business models (not including long-term opportunities, such as AVs, etc).
Learn more about key activities in digital business models here .
Uber Business Model on a Page (B-MAP)
The Business Model Canvas may be an acceptable tool to describe traditional offline business models. But it has major limitations when it comes to Digital Biz Models.
We have developed the Business Model on a Page (B-MAP) format to explain in crystal clarity the business models of digital companies, including platform business models.
What’s more we have decided to make our B-MAPs super affordable at $3. Our contribution to get your innovation journey kick-started!
Check out the Airbnb Business Model on a Page (B-MAP) + a 15-minute walk through video with explanations at an unbelievably affordable price - learn more …
In addition you will get a $10 discount code that you can use for future purchases from our store as many times as you like (applies to products over $10). Valid until 31/12/’23.
Key Assets & Resources
Network effects between the participants (drivers and riders) are essential and Uber keeps on pointing this out in all investor briefings as their competitive advantage
Algorithms, technologies , analytic capabilities and more
Skilled engineering & other staff, including local staff
Brand : An hugely important asset that helps with the growth and attracting customers as well as drives and restaurants and more
The user App
The driver App
The Uber Eats App (for users)
Uber Eats App for restaurants , Uber Eats Manager App
The Website: Alexa rank ~1,200th
The tech stack
And a lot more.
Learn more about key assets & resources in digital business models here .
Boost your knowledge
The value propositions are well-known these days. Notably though, we need to take into account the value propositions for the different types of participants, including the supply side!
Value proposition to riders
Custom ride: the “exact ride” that the user needs (i.e. pick-up and drop-off point without transit on either side)
On-demand from the App, no need to schedule a pre-order (though possible). Uber aims to provide reliable rides in that people don’t have to plan trips ahead of time
The App gives you estimated pick-up, duration and ETA of the ride
Affordability: typically lower prices than a comparable taxi ride (exception: surge pricing); an estimated fare is provided prior to the ride
Ease and convenience: removing friction from all interactions to the extent possible, e.g.
Fast pick-ups (often 3-5 mins) and tracking the driver arriving
Choice in terms of vehicle type (economy, premium, etc)
No need to tell the driver the destination or route
Cashless transactions (exceptions exist)
Rating system that allows for feedback
Safety : rider sees the driver’s name, license plate number, photo, rating before entering the car; sharing of trip with friends/family prior, if desired; real-time tracking during the ride; emergency button and reporting function.
Value proposition to drivers (Uber Rides & Eats)
Some of the value propositions for the drivers (supply side) are:
Income generation and low idle times due to the large amount of active riders
Flexible and predictable work hours as well as self-determined shift durations (at least in theory – the actual incentive system can lead to other behaviours)
Tracking one’s earnings (in real-time) and ability generate immediate earnings and ability to get paid out frequently (esp in the US)
No boss (other than the algorithms and at times challenging guests)
The driver app that helps with navigation, alerts, planning, earnings, etc
Ease of joining: requirements to join can be met by most driver car-owners (mainly: identification, background check, vehicle inspection, 4-door car)
No upfront investment in joining
Ability to earn above average in peak demand (the driver app shows surge areas ) – often weekend nights
Driver rewards program: progressive rewards based on work hours, etc
Ability to get customers (passengers) at no cost to the driver (an often forgotten fact)
Insurance coverage through Uber during the ride (drivers still need to show they are insured at other times)
Lesser skills required than taxi drivers (i.e. no need to know most of the streets of the city as you can “let the app lead the way”) but sometimes that is also obvious to the rider
Learn more about the value propositions of digital business models here .
As a multi-sided platform business, Uber will benefit from segmenting both sides: the riders as well as the drivers. Depending on the purpose, Uber likely uses classic market segmentation as well as micro segmentation . Segmentation data can be used for various purposes, including targeting users with more specific/personalised offers, stimulating more frequent use, developing new products, etc.
Traditional segmentation methods
Let’s look at some ideas how Uber might apply traditional segmentation methods to their customers (riders) and their drivers.
Home location, destinations and frequent destinations, user location tracking
Urban / rural
Age / age range
Life events (e.g. commuting to a new job until own car)
Occupation (e.g. frequent duty travel)
Loyalty: switchers, soft/hard loyals
Benefits sought: cost efficiency, convenience, etc
User status: Non-user, potential user, first-time user, regular user
Driver segmentation: Here are some categories that drivers could be segmented in. Again, the details of what Uber would use for which purpose remain confidential internal data. Here some plausible examples:
Demographic: age, socio-economic status, family status, residency status / visa type
Geographic: by city, suburb
Geo-demographic: see above example
Behavioural: preferred work hours & patterns
Occupation: whether or not the driver has a(nother) occupation and what type of occupation and education
Pro level: full-time driver with previous driving occupation or other
Offerings served: UberX, Uber Eats, UberX Share, Uber Black, etc; part-time vs full-time (>30h/week), etc
Check here how a consultancy segmented Uber drivers [pdf] (but note that Uber does not have all data listed therein)
Rest assured that Uber uses far more than the above traditional macro segments. And that’s what we are going to look at next.
Here are some specific examples of data analyses that give us an insight of what type of data Uber has and what it could be used for.
Here’s an example of geo-demographic segmentation of Uber drivers in London.
Uber uses this insight for public relations (though critics could use it for exactly the opposite interpretation) but it can also be well used for targeting prospective drivers [source: Uber, retrieved 2018, link no longer active].
What’s more, it could be used to form a hypothesis. It could go from “In London, nearly a third of driver-partners live in areas where unemployment rates are highest” to something like “In large cities, an ‘overproportional’ share of driver-partners come from areas where unemployment rates are the highest”. It can then be verified for other cities and be used for various purposes.
Take the example of getting new drivers on board. So when Uber sends out the local start-up / scout teams that try to get drivers on board, they can use such insights for digital (i.e. digital ads targeting of respective suburb profiles) as well as direct the local teams to the right neighborhoods.
Another example for micro-segmentation is the Austin case study . It lets Uber conclude that “… people are relying on Uber to connect them to other modes of transportation.” Here, Uber tracks trips by proximity to train stations to conclude that “nearly 60% of trips are one-way, meaning people are relying on Uber to connect them to other modes of transportation.” Again, an interesting insight that can be used for various purposes.
It can be used for behavioural segmentation in that location and/or to form a broader hypothesis that could be verified, refined and applied to many similar cities and situations.
Among other purposes, it could be used for predictive routing of idle drivers in order to have an advantage over taxis who do not possess this info (some experienced drivers may have noticed certain patterns or developed a gut feeling but may not wish to share in order to benefit themselves from it).
As you can see, there are different types of benefits that segmentation / analysis of data can provide to Uber and other platform business models.
Note, how this is different to what you have seen above in the intro, i.e. traditional segmentation approaches. It shows how savvy innovators can use competitor’s habit of sticking with what’s known to gain an advantage.
Learn more about the customer segments of digital business models here .
11 Digital Verticals of Disruption
Channels for the initial awareness and customer acquisition can be:
Digital advertising channels: With DoorDash advertising aggressively in the locations that they start-up, the big thing is that there is only one #1 spot on Google's search results. And that is a very important place to land on. In addition, it is a paid advertising spot based on auctioning the top-ranking spot. This is another one of the significant changes since our previous major update. In 2022, this channel has become more competed-over. And it's not just that. If DoorDash has entered your city recently, "google" for your favourite dining place. You may find that DoorDash advertises for you to order food from there ... (provided DoorDash is new in your city and your eatery is relevant to them ... )
Word of mouth is often said to be a strong driver, it may follow the typical innovation adoption curve starting with early adopters
Free media coverage based on the novelty factor. Whenever Uber enters a new country or city, it can be sure of tonnes of free coverage. And even negative coverage seems to not be stopping users from joining
Campaigns: free vouchers when Uber enters a new city (e.g. handed out at public transport stations or simply through discounts in the App)
Social media and virality
Youtube – 400k
Twitter – 1m followers
Facebook – 22m likes
LinkedIn – 1.6m followers
Pinterest – 450k viewer/month
App stores (iOS, Android) – through high ratings, ads and being feature.
Channels for the daily transactions:
Most transactions are managed through the app, including ordering but also all other aspects, including help, issues, etc
Their webpage allow for sign-up and address the biggest obstacles to joining (the process of joining, how it works, any safety concerns and the collaboration with cities/communities – see above)
Uber’s help pages
Uber uses emails & notifications to engage, stimulate participation; reinvigorate/recover (special offers, reminders, etc)
One of the best visible customer relations channel is Uber’s Facebook page (22m+ likes) with an almost instant response to most direct queries, remarkable (check for yourself)
Tiered customer support channels (via Zendesk )
Automate customer support for high-volume, low severity issues (e.g. forgotten items) to be rapid
Multi-tiered customer support (ability to contact a human) for more severe issues
Salesforce as their CRM software
Learn more about the channels of digital business models here .
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Customer relationships are very important for a company like Uber that has so much public attention. We are looking at more than their direct customers. The biggest change in recent years is a shift in questioning Uber's right-to-exist to seeing them as part of the new normal and with that the question of legislating and regulating them appropriately.
(1) Relationship to riders
Manage safety risks
Manage bad behaviours (on both sides drivers and passenger) and improve rules continuously
Deal with customer issues in an appropriate manner and timeliness (see “Channels” for more details)
Transparent pricing, e.g. criticism on surge pricing by riders and decreasing hourly income by drivers
Transparency around privacy (a number of repeat coverage over the years on insufficient data privacy , reports of security breach cover-ups )
Portray the desired company image through social and other media
These are relevant to some extent also for drivers.
(2) Relationship to drivers
The relationships to the driver will be mainly defined by what the platform does for them. But it’s not clear cut because of the different types of drivers. Casual drivers with another main job will care about the hourly wage more than anything else. Full-time drivers who use their car predominantly to drive for Uber will look at the wider package of pay and entitlements. The employment status (“partner” vs “employee”) matters for a subset of drivers.
The platform’s ability to generate income ( tipping is now available after the previous CEO was strictly against it)
Acceptable hourly wages (an Uber-contracted survey concludes that Uber drivers earn at least as much as taxi drivers , see below for a differing determination by the FTC that concludes only 10% of drivers actually achieve Uber-touted wages). Hourly wages remain a difficult to determine topic. The cost base for those who use their car predominantly for being a rider should be considered to be a very different one to those who use their only sometimes for Uber. A 2018 study (here the actual summary paper, pdf ) that came to damning conclusions but was immediately slammed by the CEO and rebutted by Uber’s Chief Economist. I will say more on this later.
Acceptable working conditions and hours. This can pertain to the number of hours that drivers need to work before they start becoming profitable (the concept of contribution margin can be applied well on the drivers’ cost base which means that they need to drive well beyond a break-even point to generate profits).
(3) Cities / communities / general public
Uber has faced massive public and political backlash that has put pressure on local regulators/legislators to look more closely at Uber’s business practices. They are being criticised (among others) for how they treat their own drivers and their impact on taxi jobs.
Here are a few example how Uber manages these discussions:
Uber Movement , a new platform for sharing data with city planning stakeholders, such as transportation planners, elected officials, academics, non-profits *
Referring to an FTC report, 1984 that shows the wasteful economic implications of the taxi medallion system
A more recent FTC report, 2015 pointing out positive effects of Uber on existing taxi value proposition
(4) The wider public
The image in the wider public is also important. It can affect demand as well as the opinion of the legislators. One of the prevailing items is the status of the workers which can drive significant changes to Uber’s business model.
Uber drives their public relations by portraying a positive image. They are stating positive contributions to the communities:
Valuable contributions during the Covid crisis, e.g. free rides for health care workers, free meals via Uber Eats to first responders, support to local restaurants, moving supplies with Uber Freight
Many examples of community support
Pointing out positive impact on the environment, e.g. reducing emissions through UberX Share
Making communities safer, e.g. through reducing driving under the influence
How Uber puts pressure on regulators through their communication campaigns [pdf]
Manage the platform’s image across the media and other relevant channels
The details behind the revenue model
Uber charges a 25% service fee on all rides (Uber Eats is different). An interesting question is how a ride plus a transaction fee is still cheaper than a traditional taxi ride?
Uber’s business model would not work if their rides were not cheaper than a taxi ride, so much so that even with the addition of the Uber commission it still remains somewhat cheaper than the comparable taxi ride.
But how can this be the case?
The answer is that the cost structures are very different. Add to this the differences by country and even on a state, city/municipality level
It is not easy to harmonise cost bases across different driver types. One very important distinction is the one between casual drivers and permanent full-time drivers.
The drivers’ cost base is in Uber’s revenue section because it’s not Uber’s cost base. The drivers’ cost base determines how much of the gross booking value Uber can convert into net adjusted revenue (the gap between gross booking and net adjusted revenue or “take rate”).
Learn more about revenue generation in digital business models here .
Let's look at this is on a qualitative basis.
Comparison to taxis
Qualitative comparison of the driver cost base compared to taxis
Utilising existing assets (depreciation / lease costs):
Most commonly, drivers utilise their own, pre-existing cars
With this, Uber spends no capital costs on these assets, has no associated cost of capital (or WACC) and no ongoing depreciation charges
For the driver, it is an opportunity to get some contribution towards what normally would be an asset parked for 95% of its time . And they still have the personal utility that they bought the car for
Drivers who may have bought a more expensive car for the purpose of driving for Uber would expect to have at least some coverage of the incremental capital costs (principal) and the cost of capital (interest). Though I am not sure if many track this kind of stuff
Drivers will expect coverage of incremental operating and maintenance/servicing cost
There is another benefit for Uber cars in that they most likely achieve higher utilisation than taxis due to Uber’s technology. Driving around until one picks up a customer is simply not as efficient. Having a taxi-central is slightly better but will certainly not close the gap. Add to this, that Uber provides incentives to drivers to adjust supply and demand (and they are working on doing this preemptively)
Ultimately, Uber (and their customers) profit from higher utilisation of an existing asset in this case
It is different if a driver buys or leases a car for the purpose of working for Uber
Uber offers to help prospective drivers to get a car
For a while, they were running their own car leasing business. But this was shut down when it turned out to be far more expensive than they thought (WSJ reports this to have been 18x more expensive ). Some will say that this is telling but I will not further comment on it
Uber also got fined by the FTC in 2017 in the context of financing a car for the purposes of generating income which was inflated: “The FTC alleges that Uber claimed on its website that UberX drivers’ annual median income was more than $90,000 in New York and over $74,000 in San Francisco. The FTC alleges, however, that drivers’ annual median income was actually $61,000 in New York and $53,000 in San Francisco.”
These drivers have the “benefit” of real-time costing (all costs are variable). They are likely to calculate their net hourly wage quite differently
On a cost basis comparison, note that many independent taxi drivers also have to finance their own vehicle plus pay (for) license costs (see below) that Uber drivers don’t incur (NYC Uber vehicles now have a TLC fee imposed as well)
Depreciation costs (and resale value / terminal value in accounting terms) are closely linked to the above and also complicated
In summary, in case 1 (using pre-existing cars in addition to personal utility), Uber drivers have a cost advantage to traditional taxi drivers/private chauffeurs. In case 2 (lease to drive), they have a comparable cost base (though there is some subjectivity involved in terms of personal utility of the vehicle in times not used for earning money). Essentially, we can assume lower input costs for Uber on this aspect on aggregate
Operational & maintenance costs:
Both taxis and Uber drivers have much of the same costs, such as petrol, insurance, servicing, cleaning, tyres, general wear and tear, phone. It seems in some countries, taxi drivers have higher insurance costs due to regulation
One could argue that these costs are lower on a revenue generation basis because Uber vehicles will be better utilised (hence don’t drive around empty, yet consuming fuel and generating wear & tear)
Let’s still assume that, by and large, these input costs are quite similar for Uber and taxis
In some (or maybe even in many?) countries, there are license fees for operating taxis which go to the government/municipality
In New York City and Chicago, you will find so-called taxi medallions (TLC). Here in Australia, there are the so-called taxi plates
In whichever form they come, some of these schemes are very expensive. In Chicago and Australia in the vicinity of $300,000 (lifetime but they can be sold on). In New York City, the medallions were traded for over $1,000,000 at some stage in 2013. Moreover, they are being traded on respective marketplaces, thus subject to speculation and price volatility
Here in Australia, the taxi plates cost around $300,000. A productivity commission established by the government has found that these schemes offer no benefit to the consumer. The drivers have to work them off for decades to come. In the Australian case, this equated to an average of $2.37 (inflation-adjusted) for the consumer for an 8km trip. This alone is a saving that a regular passenger would notice immediately
The story of taxi medallions is jumbled and saddening for the average taxi driver. For all the bad reporting about Uber, it is remarkable how little attention is placed on the fundamental flaws of the medallion system. Here is a 2018 article stating how the medallion price has crashed from some $1.3m to $160k . Here is a May 2020 article that suggests all existing NYC medallions to be revalued at $250k
In the US, the Fair Trading Commission (FTC) also saw little justification for the medallion scheme ( FTC report, 1984 )
These are high fees that add no value to the customer (nor to the driver). Uber is free of these artificial barriers to entry that limit supply and drive prices higher. As mentioned, NYC has introduced a TLC fee for for-hire Uber vehicles
Nothing has changed (in Australia) in the 18 years since the productivity report delivered these clear findings
Nothing has changed in the US in the 35 years since the FTC findings. Worse yet, the number of medallions in New York City today is lower than it was in 1937 when the medallions were introduced and this despite increasing population and mobility needs and traffic
Barry Ritholtz (a regular Bloomberg investor-columnist) explains “ How the TLC & Medallion Owners Created Uber “ (note, it’s an opinion piece)
Uber engages drivers as contractors. Thus, they do not accrue annual/sick leave, nor do they contribute to social security, pensions or other entitlement
There are some savings here compared to taxi companies. But there are vast differences between countries what taxi drivers are entitled to
This is obviously one of the most contentious aspects of the Uber business model. But it is not black and white as it is often portrayed. Neither is this discussion is not limited to Uber. I have covered this in more detail here . In any case, Uber is trialling affordable sickness, injury, life insurance partnerships for their drivers
I believe that casual drivers will be more interested in maximising short-term cash flow because they see driving for Uber as temporary. Permanent full-time drivers may have a different view. One 2017 article states that only 4% of drivers remain on the platform after one year . I am not sure if this number is correct. I have also read that this number is at 20% (more later)
Certainly, some cost savings here for Uber but it’s not clear how much
There are some interesting points here
Most interestingly, it seems in many countries Uber drivers can claim mileage (i.e. tax deductions for business-related kilometres), here: US and here Australia
This can tip the comparison considerably. Let’s do a high-level calculation. Let’s say one can travel at 20m/h (yes, miles) in city traffic (this should be an ok estimate for many cities). Now, let’s say the driver is utilised 75% of the time. This makes 15m per hour. The standard IRS mileage deduction is $0.52c/m. This calculates to $7.8 per hour. Now, let’s assume the driver net wage per hour is $18/h (this is at the high-end – remember some say it’s closer to $10/h). Even at the high end ($18/h), some 43% of net income comes from tax deductions (I’m sure you can calculate this percentage for the case of $10/h). I.e. taxpayers foot a considerable amount of this
One can see that this is contentious. Sure, taxis get the same tax break. But taxis companies are fully based in the country that they get the tax break in. Thus, the money stays in the local economy (country level view). The criticism will be that a taxpayer in, say Australia, will indirectly pay corporations overseas (the more tax subsidies there are, the less Uber needs to give the driver). Uber will say that the consumer will benefit in terms of lower costs for the ride. It will remain contentious until a productivity commission looks into this
Both Uber drivers and taxis pay GST and some other taxes
From a cost base perspective, taxis and Uber drivers appear to be on a similar footing with the big caveat of mileage needing a more detailed analysis
Economies of scale:
One of the potentially most interesting cost savings comes from Uber’s ability to achieve better prices for their drivers’ input costs.
many other things
Uber staggers the benefits depending on the activity of the drivers. Those that drive more, can achieve more savings. There are discount levels from bronze to platinum .
Note that some of the 3rd party discounts are also available to the provider’s retail base, e.g. their loyalty members. In some cases, the Uber-obtained discount may be higher or the driver can join the program without membership fees or incurring other expenses to get the discounts. It is definitely an economic benefit for drivers and a strengthening of Uber’s business model in that scale can lead to lower unit cost.
You can see how complex the matter is. It’s not about solving this for Uber. The message is that as an innovator you should be aware of these kinds of considerations.
The most important insight should be that the revenue is not just the sum of transaction fees. The question will always be if a platform can create enough cumulative value for its participants so that it can capture value for itself.
Learn more about the customer relationships of digital business models here .
For many online platforms, the biggest cost element are customer acquisition costs (CAC). Up to the release of the IPO document, this was also assumed to be the case for Uber.
However, one rather interesting point that was revealed in the IPO document and subsequent annual report, was the significant cost of revenue. These reports indicate that the biggest elements of it are insurance and payment costs. Cost of revenue was higher than marketing and sales since 2014. It still is possible that cost of customer acquisition is the single biggest driver given that both buckets (cost of revenue and sales and marketing) include many sub-items. But it might not be the case.
Uber’s cost element are (ordered in the highest percent of revenue, 2019):
Cost of revenue (51% of revenue, 2019): including “insurance expenses, credit card processing fees, hosting and co-located data center expenses, mobile device and service expenses.” This cost item went up from 50% in 2018. This would be concerning because it is a direct cost and was coming down over the recent years (in terms of % of revenue) as one should expect. However, the 2019 10-K indicates that the increased inefficiency was caused by the new business areas.
Sales and marketing (33% of revenue): “advertising expenses, expenses related to consumer acquisition and retention, including consumer discounts, promotions, refunds, and credits, Driver referrals, and allocated overhead” (and post-IPO it also includes stock-based compensation to sales and marketing employees)
Research & Development (soared up to 34% of revenue in 2019): slightly higher than sales and marketing (but it was far lower for most of the previous reporting periods). It was largely driven by stock-based compensation for engineering employees, hence likely to go back to previous levels of around 15% over time. R&D costs “consist primarily of compensation expenses for engineering, product development, and design employees, including stock-based compensation, expenses associated with ongoing improvements to, and maintenance of, our platform offerings, and ATG and Other Technology Programs development expenses, as well as allocated overhead.”
General & Admin (23% of revenue in 2019): “General and administrative expenses consist primarily of compensation expenses, including stock-based compensation, for executive management and administrative employees, […] also include legal settlements.”
Depreciation and Amortization (3% of revenue, 2019): It’s this low because most assets (the cars) are owned by the drivers. Once autonomous vehicles come into play this will likely change (though there could be different ownership models). “all depreciation and amortization expenses associated with our property and equipment and acquired intangible assets[ …], and dockless e-bikes […]”
And other costs, including interest expense . Recent bond coupon rates were 7.5% which would be higher without the support of the Fed in the wake of Covid.
Learn more about the cost structures of digital business models here.
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Home » blog » What is the business model of Uber?
What is the business model of Uber?
Do you remember those long waiting hours in the middle of nowhere, where you are expecting for just at least one taxi to show up or you are required to walk 2kms to the main roads to get a cab? Well, Uber has been the solution to all such cab-related issues and so it is not just an app for us but a god-sent messiah. Nevertheless, the real description of Uber is that it is a smartphone app that provides on-demand service to its users. It has a very simple process where a registered Uber user makes a request over the app which then connects the willing passenger to a taxi driver. Founded in 2009, the Uber service is currently available in 600 cities across 65 countries. With more than 15 million daily trips, Uber has been able to clock a revenue of $11.3 billion in 2018. The USP of Uber is that it not like the traditional taxi business which believes in owning taxi and employing taxi drivers, rather it connects the passenger to a taxi driver and takes a share of the fare. So, if you are still wondering how exactly the business model works, then let me take you through this quick guide to help you understand the Uber business model better.
Components of Uber’s Business Model
Uber business model can be divided into three primary components:
- Taxi drivers
- Fare payment
Passengers: The model is initiated by the passengers who register themselves through the smartphone app and then book their on-demand services. Given that Uber is a customer-centric service, it is very important that the passengers feel at ease and as such immediately after the booking the app provides you the driver’s details and the estimated fares to be paid. In fact, the passengers are also able to track their rides while boarded.
Taxi drivers: The selection of the Uber taxi driver doesn’t involve any scientific algorithm. Anyone having a registered driving license and a car is eligible to become a Uber taxi driver. Based on seven-year background verification, the drives are shortlisted after which they are enlisted and provided with Uber phones for connecting to passengers. The taxi drivers are the important cog in the Uber business model and as such are identified as partners.
Fare payment: The estimated fare that is provided to the passenger at the time of booking is calculated based on the car type, distance and peak hours. You must have experienced that the fares face hike during the peak hours and lower down in the off hours, which is another excellent aspect of their revenue model. They offer you various payment modes keeping the ease of the users in mind, i.e. debit card, credit card, and online wallets.
How the business model works
The Uber business model works in four very simple steps as shown below:
Step 1: In this step, the passenger places the request for a cab through the Uber app by providing the pick-up and drop location.
Step 2: Once the request has been received by Uber, the user/passenger information is sent to the driver. Now, based on his / her availability and convenience, the taxi driver can either accept or reject the ride.
Step 3: Once a driver accepts the ride, the user is then notified about the acceptance along with the information regarding the taxi driver. The app allows the user to track the cab’s route and the ETA (Estimated Time of Arrival).
Step 4: Once the taxi arrives at the destination, the ride is marked over and then the user is required to do the payment. Further, the user gets an option to rate the trip, which is very important because it helps Uber to keep an account of the quality of service offered by each taxi driver.
The Revenue model
Uber’s revenue model has a uniqueness of its own as it is based on a variety of factors that not only includes the revenue through the customer’s trip commission, but also the surge pricing, revenue from cancellation of rides and endorsement of other products on the app. However, the principal revenue generation is contributed by 20 % of the fare charged to the customer, while the driver is entitled to the remaining 80%.
Now, let us look at two of the striking features of Uber that has helped the revenue growth of the period of time:
Diversified product offering: It is amazing to see how Uber has identified each customer segment and has built tailor-made offerings for them. The company has innumerable cab models assigned for each service category. For instance, Uber X and Uber SUV are for the elite class who can afford to pay a relatively higher fare for some additional luxury, while Uber Taxi is for those who want a cost-efficient solution.
Surge pricing: Uber uses a special pricing algorithm that automatically increases the price per mile based on the ongoing service demand. This variation in cab fares as per the surge pricing technique has been an important aspect of their business model as it supports the company revenue to some extent. Basically, the higher price depends on the number of requests made by willing passengers and the number of available drivers.
Learnings from Uber’s Business Model
Finally, let us jot down some of the important takeaways from Uber’s business model:
- Uber does not go for the ownership model, rather provides more than 15 million rides a day through its partner network
- Uber has identified the inherent problem in the cab industry and has successfully provided a solution and then introduced disruptive technological infrastructure
- Uber follows the principle that customers are the kings as they are the ones who will drive the business growth
- Uber acknowledges the role of their partner network and offers various incentive schemes for its taxi drivers as partners besides the 80% share of the total fare.
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