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The Economics of UberX in NYC

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Re: The Economics of UberX in NYC

#21

Post by brownbat »

maerF0x0 wrote: post #11
wdewind wrote: post #4

Earlier quoted context omitted.

And yet people still choose to drive for Uber. Are they all being taken advantage of?

And yet people work for walmart, are they all being taken advantage of? There is a claim that some positions of power make people unqualified to make choices. Think student/teacher or adult/minor sexual relations or maybe some of the ideas around accredited investors -- non-accredited investors are not allowed to invest in certain types of assets to protect them from predatory practices. I'm not commenting on moralit…

Sometimes we have laws that protect people from their own decisions, absolutely true. But protecting people right into unemployment seems like a funny kind of help.

Re: The Economics of UberX in NYC

#22

Post by francismcjaynes »

As I move my startup forward I work as an Uber driver and have for the last 13 months. Very simply, fair prices have dropped substantially and it is much harder to make the same amount of money as before, although operating costs are the same or higher. Not to mention the constant risk of catastrophic damage / injury .

Uber can massage numbers all they want but a driver can only take - on average - the same number of fares per hour, so drivers work longer and harder. In that way it is exactly like any taxi job on earth - long, hard hours for low pay with zero equity value accruing. But that is ok, because that is the nature of such a job. Uberx is a tremendous (r)evolution for the consumer but for the driver... not so much. Driving for Uber is a blessing for me because it allows me to control how many low-paying, high-risk hours I need to fulfill to make my entrepreneurial nut per week - and it works for now. But for the the mainstream driver - hey, the new boss looks a lot like the old boss in all the ways that really count. Uber on!

Re: The Economics of UberX in NYC

#23

Post by whiddershins »

morgante wrote: post #20

While fascinating, this analysis seems to fall apart on two major fronts. 1. It seems to completely discount surge pricing, which would likely change these numbers significantly. 2. It assumes that taxi and Uber behavior is very similar, but this seems pretty dubious for 2 major reasons: a. In dense areas it's far more convenient to use a taxi than an Uber (you can hail one in a minute or two), while in less populate…

The author does discuss surge pricing.

Re: The Economics of UberX in NYC

#24

Post by morgante »

whiddershins wrote: post #23
morgante wrote: post #20

While fascinating, this analysis seems to fall apart on two major fronts. 1. It seems to completely discount surge pricing, which would likely change these numbers significantly. 2. It assumes that taxi and Uber behavior is very similar, but this seems pretty dubious for 2 major reasons: a. In dense areas it's far more convenient to use a taxi than an Uber (you can hail one in a minute or two), while in less populate…

The author does discuss surge pricing.

Only briefly in a footnote, and without updating the math to reflect that.

Re: The Economics of UberX in NYC

#25

Post by whiddershins »

What's odd to me is trying to discuss Uber in NYC by comparing to yellow cabs. We have a thing in NY called "car services" which basically everyone uses, and which are much more comparable to Uber than taxis are. You call a car, they come to your house, they pick you up, and they take you where you want to go for a predetermined price.

In general, the car services I take are cheaper than Uber or metered taxis. But not always. And they can be a little more annoying to deal with than just using an app on your phone. Certainly Uber would be far less intimidating for tourists.

Plus Uber was able to pick me up in the rain on Halloween, because of surge pricing. And they only charged me triple!

But seriously: if you are talking about Uber in New York and not mentioning Arecibo car service, which has several hundred of cars all over the city at all times of the day and night, and is one of many such services in operation, you are missing a huge part of the equation.

Re: The Economics of UberX in NYC

#26

Post by harryh »

morgante wrote: post #24
whiddershins wrote: post #23

Earlier quoted context omitted.

The author does discuss surge pricing.

Only briefly in a footnote, and without updating the math to reflect that.

"it turns out that surge pricing amounts to no more than a 12.5% fare premium. Not nothing, but not explanatory either."

Re: The Economics of UberX in NYC

#27

Post by badusername »

whiddershins wrote: post #23
morgante wrote: post #20

While fascinating, this analysis seems to fall apart on two major fronts. 1. It seems to completely discount surge pricing, which would likely change these numbers significantly. 2. It assumes that taxi and Uber behavior is very similar, but this seems pretty dubious for 2 major reasons: a. In dense areas it's far more convenient to use a taxi than an Uber (you can hail one in a minute or two), while in less populate…

The author does discuss surge pricing.

Nope, he does not. If he'd studied the blog post he's linked to, it is clear that surge rates can go a few multiples at busy periods, which would make an outsized contribution to total fares even at 10-15% occurrence.

If you look at the service area on the ubernyc page, it goes way beyond the city limits (even a fixed price to the hamptons). Again, even if the percentage of these rides are low, it isn't hard to see how average trip length or average fare would be moved up significantly.

I read the article - even though it's written well, it makes a lot of hypotheticals based on hazy assumptions that seem to lead well to a result that the author probably wanted to put forward. Not the best article if you want an objective analysis on the issue.

Re: The Economics of UberX in NYC

#28

Post by harryh »

pbreit wrote: post #8

This guy's whole article falls apart based on one terrible assumption: that Uberx behaviors are similar to taxis. There are a whole host of reasons why this is not the case. Taxis are more likely to hang out in dense, Manhattan areas contributing to short and slow rides. Riders would much prefer to take an Uberx to the airport than a taxi. Surge pricing. Etc.

How big are these differences? Do you have estimates of some kind? How does that change the bottom line on the math he's done? Without putting numbers to your assertion I'm not sure how valuable it is.

Re: The Economics of UberX in NYC

#29

Post by rtpg »

wdewind wrote: post #4
haddr wrote: post #3

The most important giveaway of this post is this: "But at the end of the day, their business model boils down to taking a 20% rake of a large commodity services business while pushing assets, costs, and liabilities off the corporate financial statements and onto the shoulders of their not-quite-employee-partners."

And yet people still choose to drive for Uber. Are they all being taken advantage of?

Well yeah because they've been subsidizing wages. Just recently Uber's tried to lower the amount paid out to drivers (saying the previous rate was "promotional") and there was a huge amount of discontent

http://www.businessinsider.com/uber-new-york-city-office-pro... <-- some protest at New York office, same sorts of protests elsewhere

Re: The Economics of UberX in NYC

#30

Post by damian2000 »

wdewind wrote: post #4
haddr wrote: post #3

The most important giveaway of this post is this: "But at the end of the day, their business model boils down to taking a 20% rake of a large commodity services business while pushing assets, costs, and liabilities off the corporate financial statements and onto the shoulders of their not-quite-employee-partners."

And yet people still choose to drive for Uber. Are they all being taken advantage of?

Yeah I think they are, but people also value being able to control how long they work for and the exact hours they work. Plus it can be just an additional stream of income.
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