Uber and other ridesharing companies make money by taking a share of every trip charged through their phone apps. Uber keeps 25% of each fare booked through its app, while its rival Lyft takes 20%.
Uber sets different rates for every city. The fares vary according to the immediate demand for rides and the user's choice of vehicle and service.
How Uber's Pricing Works
Uber relies on a surge pricing strategy that increases rates during times of peak demand. That draws more drivers to take to the roads to claim fares. Once peak demand is met, the fares gradually decrease.
- Ride-sharing company Uber takes 20% of the price of all rides booked through its app.
- Its prices vary from city to city, and its charges differ according to the level of service and the vehicle type selected by the customer.
- Customers pay and tip directly through the app.
Fares also vary according to the type of service selected. As many as five levels are available, including a pool service, UberX, UberPlus, UberBlack, UberSUV, and UberLux. There are options for specific locations or for pickup a short walk away.
The pool service is for riders who don't mind sharing the car with other riders and taking detours to pick them up or drop them off. The UberX is a reasonably late-model compact car. From there, the vehicle options get larger and more luxurious up to the UberLux, when you really need the Bentley.
Uber's own price estimator calculates prices from downtown Chicago to O'Hare International Airport at about $26 to about $46. Chicago reputedly has Uber's least expensive fare structure.
The number of drivers Uber says it has in its global network.
In New York City, the Uber estimator quotes prices ranging from about $39 to about $60 from Times Square to Laguardia International Airport. The city recently passed a law requiring ride-sharing services to pay its drivers a minimum of $17.86 an hour.
The Uber app collects the fare by credit card before the driver arrives, and collects an optional tip for the driver afterward.
Uber is branching out with a variety of services, some relying on its network of self-employed drivers, which the company estimates numbers about three million worldwide as of mid-2019.
The most familiar service, UberEats, picks up and delivers takeout food to customers. In Los Angeles, its restaurant selection as of mid-2019 was dominated by fast food and Chinese takeout. Uber currently competes with DoorDash and GrubHub in the food delivery business.
Other business ventures include UberFreight, an app that matches shippers with carrier services, and Uber for Business, a version of the ride-sharing app that is tailored for routine business use. A similar venture, Uber Health, focuses on arranging transportation for medical patients and staff.
The company is testing additional "mobility options" including electric scooters.
Uber Technologies Inc.
Uber Technologies Inc. (UBER) went public on the New York Stock Exchange in May 2019.
The company's revenues rose to $11.3 billion in 2018, from $7.9 billion the year before, but the company has yet to turn a profit. As of July 3, 2019, the company had a market cap of $74.6 billion and its earnings per share were -$2.24.
Uber was launched in San Francisco in 2009 by entrepreneur Travis Kalanick and programmer Garrett Camp. As of mid-2019, it operated in 785 cities around the world.