It’s no secret that Uber is my one of my favorite innovations for ground transportation. When public transportation in a city isn’t good, I used to get really frustrated by the lack of options and taxi “mafias,” though fortunately Uber has solved that problem in many cities.
Uber Black is the “standard” service and a bit more than a taxi, while they also have UberX, which is usually cheaper than a taxi. And thanks to the instant feedback loop (you rating the driver and the driver rating you), service is excellent across the board, in my experience.
I feel like I understand the economics of Uber Black pretty well. The cost is a bit higher than what you’d pay for a taxi (though flat rates from airports can be a steal, especially internationally), but for that additional fee you’re getting a nicer vehicle, GPS tracking, and the convenience of paying through the app.
UberX, however, is another story.
UberX is the low-cost version of Uber, and doesn’t have the same restrictions in regards to car type. So it seems like they’re mainly personal vehicles, as opposed to Uber Black, which seems to typically be licensed limo drivers. But the prices are often less than half the cost of Uber, and in some places they’re more plentiful.
I’m in Chicago this weekend for a frequent flyer gathering, and it was a pretty long day, so I thought it might be nice to order some pizzas. Apparently our hotel is outside the delivery zone of every Domino’s in town, so a couple friends offered to go pick up our order.
The store was only a few miles away, so I requested an UberX to take them there and back. They should have only been gone a few minutes, though unfortunately the Domino’s was still dealing with the aftermath of their $1 pizza promotion, so they had to wait for the order.
All told they were waiting for pizza for well over an hour, plus the ~10 minute drive each way. I’d told them to just have the UberX driver wait, since we didn’t know how long it was going to be (and it can sometimes be tough to get an Uber in the suburbs on a Saturday night).
After an hour and forty minutes though, I was a bit scared to look at the final fare.
Clearly I needn’t have worried, but how the hell are they making any money at these rates?
That’s cheap as can be to start with, and when you factor in the $30 referral credits and Amex bonuses I just don’t understand how this is profitable.
What am I missing?