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Uber and Lyft Suggest the Days of Cheap Rides Could Be Over

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Re: Uber and Lyft Suggest the Days of Cheap Rides Could Be Over

#41

Post by seriesf »

heavyset_go wrote: post #39
seriesf wrote: post #30

Earlier quoted context omitted.

I don’t see how the Uber model can ever approach the price of a taxi. Traditional taxis had purpose-built vehicles, shared garages, parts bought at wholesale, and cars on duty all day every day. Uber drivers have disposable Toyotas, pay individually retail prices for insurance, maintenance, and parts, and their vehicles are usually parked. The traditional model has the advantage on cost.

The Uber model relies on an underclass whose need for cash right now overrides any concerns they might have down the line about vehicle depreciation, the consequences of operating a taxi on a consumer insurance plan, the high self-employment tax burden, health insurance or actually breaking even after taking those factors into account.

I'm assuming the population of dupes will eventually be depleted.

Re: Uber and Lyft Suggest the Days of Cheap Rides Could Be Over

#42

Post by akavi »

pradn wrote: post #17

"When will these darlings of Silicon Valley begin to turn a profit?" The funny thing is criticism of these two companies has been vociferous on Hacker News since the very beginning. I'm not sure what company I'd even call a darling. Every example I can think of FAANG, Dropbox, Slack, etc all have various criticisms. Perhaps Spotify? But it's not a Silicon Valley company.

It feels like Dropbox and Slack have been spoken of positively more often than not. And I'd say Stripe, Twilio, and various other B2B "Infrastructure" companies seem to get the warmest response.

You're right though, if HN is at all representative of Silicon Valley, Uber and Lyft are hardly its darlings.

Re: Uber and Lyft Suggest the Days of Cheap Rides Could Be Over

#43

Post by heavyset_go »

seriesf wrote: post #41
heavyset_go wrote: post #39

Earlier quoted context omitted.

The Uber model relies on an underclass whose need for cash right now overrides any concerns they might have down the line about vehicle depreciation, the consequences of operating a taxi on a consumer insurance plan, the high self-employment tax burden, health insurance or actually breaking even after taking those factors into account.

I'm assuming the population of dupes will eventually be depleted.

I doubt that the pool of people who are willing to trade their time and vehicle's value for a paycheck today is going to shrink any time soon.

Re: Uber and Lyft Suggest the Days of Cheap Rides Could Be Over

#44

Post by sokoloff »

askafriend wrote: post #38
fallat wrote: post #26

Earlier quoted context omitted.

I've been on a SharkTank binge just for fun, and one thing I notice is, every time a Silicon Valley company goes to pitch, the idea has some pretty bad problems: 1. The margin is high but the idea is easily copied 2. A ton of money has already been invested, and still not making money 3. Other things I can't remember at this moment I think SV has some sort of problem when it comes to starting businesses. Rarely somet…

You shouldn’t be using SharkTank to form your view on Silicon Valley... Some of the worst companies get on there, SV or not. Think about it, why would a good company need to go on Shark Tank? They can raise from much better investors if it was a good company.

Some small number seem to appear on SharkTank primarily for the free TV exposure. That seems a viable strategic move.

Re: Uber and Lyft Suggest the Days of Cheap Rides Could Be Over

#45

Post by save_ferris »

6gvONxR4sf7o wrote: post #31

> ...the company’s upcoming pricing algorithms, which they hinted might be able to more precisely predict what riders might be willing to pay for a ride. I hate the whole idea of this. If they track you around, maybe realize you order from fancy places on uber eats, then they will raise prices on something that costs them the same. There's something that strikes me as especially awful about automating the "how much i…

Couldn’t this technically qualify as discrimination? I vaguely remember reading about how one of the big dating apps increased prices with a user’s age, but had to revert the policy because it amounted to age discrimination.

I would hope income qualifies for the same protection, but maybe not.

Re: Uber and Lyft Suggest the Days of Cheap Rides Could Be Over

#46

Post by alecbenzer »

6gvONxR4sf7o wrote: post #31

> ...the company’s upcoming pricing algorithms, which they hinted might be able to more precisely predict what riders might be willing to pay for a ride. I hate the whole idea of this. If they track you around, maybe realize you order from fancy places on uber eats, then they will raise prices on something that costs them the same. There's something that strikes me as especially awful about automating the "how much i…

I share the intuition that price discrimination feels wrong, but I have trouble really articulating why.

Why is "the seller would have given it to me for less" any better than "the buyer would have given me more for it"?

Re: Uber and Lyft Suggest the Days of Cheap Rides Could Be Over

#47

Post by imustbeevil »

6gvONxR4sf7o wrote: post #31

> ...the company’s upcoming pricing algorithms, which they hinted might be able to more precisely predict what riders might be willing to pay for a ride. I hate the whole idea of this. If they track you around, maybe realize you order from fancy places on uber eats, then they will raise prices on something that costs them the same. There's something that strikes me as especially awful about automating the "how much i…

From an efficient market standpoint, a good balancing measure would be if consumers knew exactly what it cost Uber/Lyft to provide the service. That way even if they charge you more for being rich, you can make an informed decision whether or not you want them profiting as much as they are from you.

A competitor might even find an advantage by providing that information. For example, if a car service told you exactly how much the driver made and how much the service took as a cut, you might be willing to pay more because you know where the money is going.

Re: Uber and Lyft Suggest the Days of Cheap Rides Could Be Over

#48

Post by pb7 »

save_ferris wrote: post #45
6gvONxR4sf7o wrote: post #31

> ...the company’s upcoming pricing algorithms, which they hinted might be able to more precisely predict what riders might be willing to pay for a ride. I hate the whole idea of this. If they track you around, maybe realize you order from fancy places on uber eats, then they will raise prices on something that costs them the same. There's something that strikes me as especially awful about automating the "how much i…

Couldn’t this technically qualify as discrimination? I vaguely remember reading about how one of the big dating apps increased prices with a user’s age, but had to revert the policy because it amounted to age discrimination. I would hope income qualifies for the same protection, but maybe not.

It does not.

Edit: Answering the very last part of the comment; it does not have the same protections.

Re: Uber and Lyft Suggest the Days of Cheap Rides Could Be Over

#49

Post by sokoloff »

ghaff wrote: post #36
seriesf wrote: post #30

Earlier quoted context omitted.

I don’t see how the Uber model can ever approach the price of a taxi. Traditional taxis had purpose-built vehicles, shared garages, parts bought at wholesale, and cars on duty all day every day. Uber drivers have disposable Toyotas, pay individually retail prices for insurance, maintenance, and parts, and their vehicles are usually parked. The traditional model has the advantage on cost.

I don't necessarily disagree although I might argue, for example, that maybe Uber drivers are willing to take a smaller cut in exchange for the flexibility they have. But you make a good argument in general that there's certainly little reason to think that Uber rides should be significantly cheaper than cab rides are given a sustainable profitable business.

Uber/Lyft offer an option for someone who is already carrying the fixed costs of owning a depreciating vehicle to come into the market part-time and do some driving for income.

They also don't have to commit to set hours.

These should have the effect of increasing the supply of drivers (not to the full extent of all ride-share drivers, of course).

They also don't have to front the capital cost of a medallion.

Ride share prices are sensitive to market demand in near real-time rather than being set by the taxi commission (in some long-term relationship to supply/demand).

Combining those effects, I can easily see ride share prices settling somewhere below taxi rates and still leaving profit for all players.

Re: Uber and Lyft Suggest the Days of Cheap Rides Could Be Over

#50

Post by Ericson2314 »

alecbenzer wrote: post #46
6gvONxR4sf7o wrote: post #31

> ...the company’s upcoming pricing algorithms, which they hinted might be able to more precisely predict what riders might be willing to pay for a ride. I hate the whole idea of this. If they track you around, maybe realize you order from fancy places on uber eats, then they will raise prices on something that costs them the same. There's something that strikes me as especially awful about automating the "how much i…

I share the intuition that price discrimination feels wrong, but I have trouble really articulating why. Why is "the seller would have given it to me for less" any better than "the buyer would have given me more for it"?

The problem is there is this bell curve thing. Charging rich people more sounds good and redistributory. But the really rich people have more leverage because there are so few other buyers with their purchasing power completing.

End result would probably be like super high income tax with low rate "capital gains" loophole.

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