Peak Pricing

Finance Allah shmoop What are the economics of uber Ah

uber you've seen it The little you thing there Yeah

that designates it's an uber driver car Well from pretty

much nowhere in two thousand eight Uber today is a

big uber German for all over or everywhere so there

are two flows of economics to this now enormous company

One flow is about extra dough coming into their drivers

on a given trip a driver collects eighteen dollars forty

cents from the trip Uber gets twenty five per cent

of that money or four dollars sixty cents in this

instance anyway and the driver pockets the rest It was

a nine mile trip It cost the driver about a

dollar in gasoline and maybe figure another dollar in wear

and tear and insurance and maintenance and occasional vomit clean

up and well on that two dollars of expense The

driver then keeps eleven dollars eighty cents for her time

in gross profit Not a bad gig Getting three of

those rides in an hour and it sure beats flipping

burgers So that's one set of economics It's contractor work

for the drivers who by the way as contractors can

tax deduct a meaningful part of the cost of operating

their car Since it qualifies as a business expense it's

legit So then what about the four dollars sixty cents

too Hoover What was uber's expenses Toe Earn that four

sixty Well uber is basically a giant billing system at

art They track and bill and clear in calendar drive

units and make everything look all nice and pretty on

a spreadsheet So there was a big fixed cost to

initially build that giant database to track all of the

driving events But then once the database was built well

not a lot of expenses continue to Maine Chainat Uber

also had to recruit tons and tons and tons of

drivers like in a lot of cities That's their pinch

point They can't get enough human beings who need or

want the extra dough to just you know be around

quickly enough so that uber demand er's get serviced quickly

enough in that local area such that they don't either

Goto lift their hated comm editor of Uber for God

forbid call one of these yellow things Taxi That's what

it was What recruiting drivers who are a legal be

non convicted violent felons and see not suffering from extreme

halitosis or B o is not easy There's a whole

background checking process and all kinds of loitering and human

resource ing and other stuff that has to go into

this human filtration system All right well what other expenses

Well insurance is a biggie Never know when a driver

is gonna decide to take a shortcut through the Chicago

River there Then there's government regulation that keeps hitting him

or at least the threat thereof Read Mohr Lawyer Bills

Yeah so yeah a lot of elements to noodle here

But overall uber is doing just fine for itself In

fact weed you know have to give them five stars