An UberlyFantastic New Business Model

Recently ride-share programs have been all the rage. I myself cannot remember the last time I took a cab. In my opinion these ride-share programs, and I will specifically be speaking on the behalf of Uber as that is the only one I utilize, have massively decreased the amount of money I spend on cabs. On a Friday night, I can get from downtown to Lincoln Park area for about $10-$12 which is far cheaper than the usual $20 with tip I give to cab drivers.

The operations of Uber itself are quite unique and they have been as successful as they have found a way to thrive on the free-market system in the United States, as well as other countries in the world. There has been recent political pressure to shut-down the companies but it looks like those demands will not be fulfilled.

Uber has morphed together the fast smartphone world of today as well as finding a massively over-priced market and have completely changed the world know to cab drivers. We all have had experiences were you sit in a cab feeling uncomfortable as they make no effort to talk to you, are on their phone talking the entire time, and the inside of the car is beat up. Uber has change that by operating a unique manner few have tried to do. The operations of Uber itself have always impressed me as they literally have a network of hundreds of thousands of driver and they have penetrated the global markets as well.

I will always take Uber now over taking a cab, except for one instance. Surge pricing has always confused me and at times will annoy me to no end. Last season my friend and I attended a Blackhawks game and we took an Uber. Since it was snowing there was a surge pricing in effect; however, we failed to look to see the multiplier of the surcharge. Our ride ended up costing us about $60. At the time Uber was not super transparent about surge pricing but since then they have made it clear to the consumer by making sure to have the consumer actually accept the surcharge before the car is ordered.

Another thought is if Uber’s growth will sustain itself, or will there eventually be too many drivers for too little of consumers? This in my opinion directly relates itself to our class in Week 4 where we were discussing forecasting. With a new company such as Uber being in a newly created market space it is hard to look to comparables. Using forecasting techniques such as weighted average will be useless as the amount of high growth will through of the long term sustainability Uber is looking to achieve. Other techniques such as Exponential Smoothing and Trend Projection will be useless as there is not enough years to look to when performing research. It will be interesting to see in the upcoming years if Uber avoids the over forecasting pitfall so many new companies do and continue to transform the car industry as we know it today.


How would you go about and forecast Uber’s growth?
Have you ever used a ride share program? If not, what would your reason be?
Have you found the ride-share programs to be dramatically cheaper than cabs?
What is your opinion about surge pricing? Is it a necessity for Uber to efficiently maximize profits or will it ends up hurting the company by turning away consumers?


8 thoughts on “An UberlyFantastic New Business Model

  1. I found this to be a very though-through blog. I have my own personal experience with uber as I became a partner with Uberx and had the opportunity to see company’s operations from the inside. It is a very interesting model that did revolutionized the share-ride industry. Did you know that Uber drivers can make up to $60,000 per year? I think that the Uber’s growth is very much depended on the undergoing legislation in the ride-sharing industry. There is lot at stake for example the Insurance companies take a greater risk that is currently is not accounted in their rates.

    Here is my promo code it will give you $20 credit towards your Uber experience for a new user.

  2. I use Uber frequently, because it’s typically cheaper than cabs, drivers are friendly and it’s extremely easy to use their service. I find their dependence on word-of-mouth marketing strategy to be great for their growth. I don’t know how many times I’ve shared my promo code to receive Uber credits and give new users their free ride.
    From what I understand about surge pricing, it’s solely based upon the demand of riders and supply of drivers at that time in that particular area. Since Uber drivers can work at their own discretion, the surge pricing encourages more drivers to hit the road since they earn a percentage of each ride. I don’t think this hurts their business, because I think it’s necessary to even their supply and demand.

  3. I have yet to use Uber by myself for a ride but have used it off of other people’s applications. I really think the concept is very smart and it makes getting transportation very easy. I was recently in Boston and thought the city would be just like Chicago, where it is very easy to stand on the side of the street and raise your hand up, but for some reason there were a lot less cabs in the city than what were needed and I could stand outside for 15 minutes and never see an open cab. Uber was very helpful during my trip, as I used it a number of times. I appreciated the convinence of it in Chicago, but didn’t realize how much other cities needed it. Also, the paying on your app makes things much quicker and easier; you are able to jump in and jump out very quickly which is one reason I would often times walk instead of taking a cab because payment always took a great deal of time.

  4. I have never used Uber, however I know of two people who do Uber daily so I am familiar with the process. I haven’t gotten the chance to use any type of ride share program mainly because I haven’t had a reason to call for one. I do find that ride share programs are cheaper just based on my previous experience in taking cabs and I’ve seen the price points for people who have taken specifically Uber rides and they are much cheaper than the cab rides I have taken in the past. I think it is necessary for Uber to have surge prices just because they have to make sure that enough people are on the road for their customers to receive a ride. They do notify you when surge prices are in effect and also let you know when they go down. According the Uber’s website, surge prices fall back to normal once normal levels of activity are reached again.

  5. I’ve used Uber a few times with some friends and found it quite beneficial. It is definitely a great idea since you could split the cost with your friends along with the cheaper prices. However, as far as Uber’s forecasting, I definitely believe that there will be too many drivers for too little consumers. Uber may have to do something to restrict the amount of drivers working for Uber. Possibly raising the requirements for drivers to own vehicles newer than 2007 and having a certain amount of driving experience. I also agree with how well Uber has utilized the free-market system in the United States. Their idea has taken off and with making some smart managerial decisions to not bring on too many drivers I think they can still remain as a successful company.

  6. Interestingly enough, I shared the same recently developed taxing habit that you have in that I hadn’t taken a regular taxi (Uber exclusively) for nearly a year now – up until today. In this case, I was reminded of why I chose to use Uber over taxis. When I got into the taxi this morning to go from one to point to another, I first asked how much the ride is going to cost. The driver replied “No more than $10.” This seemed reasonable to be, as I had just turned on my Uber app and noticed the rate quote of $10-12. I was a little shocked at the cheaper rate in the taxi vs Uber, so I was pleased with my decision…until I reached my destination. I looked up at the rate counter and saw the complete fare of $14…and then I was asked to provide a tip. My Uber ride would have been cheaper – only a few dollars, however, over time and many rides, then this adds up significantly.
    Digressing to your point about the benefits and also noting that I actually took the CTA to the point of a cheaper place with the intent of catching an Uber because of the listed 2.5x surge pricing, I can absolutely understand the frustration of this convenience being cheap to wildly expensive.
    This and the super influx of Uber’s army of drivers into the market may very well create a competitive environment closely resembling that of the standard taxi industry.
    Great article!

  7. I am relatively experienced when it comes to calling for Uber. From my own experience, it provides a niche that serves to create a lot of convenience. Sharing the ride feature on the uber app takes forking over the ever elusive loose cash out of the picture and it is more than apparent the convenience this feature provides after a long night out in the town. I believe this company has a real chance at providing something that taxis seem to be behind in, and its use of technology gives uber a leg up in this new world placed very comfortably in convenience.

  8. Uber–the rescuer to my laziness and fright of late night CTA trips. As a college student who is not able to lug her car everywhere it’s needed, Uber has been the savior to many of my problems. Not only will your ride be ready for service in less than 5 minutes to your convenience, but I find Uber much more clean, safer, and friendly than the usual cab ride. Also, it does not hurt that the price doesn’t kill my wallet. Every single Uber driver I have come in contact with has engaged in friendly conversation the majority of the ride. The super friendly service has always earned them at least a 4 star rating. The ability to have information of who will be your driver, what car they drive, and how they rate from other riders keeps my mindset at ease that I will be in safe hands for the duration of my Uber experience.

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