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  • Writer's pictureGreat Companies

UBER Business Model Canvas

Uber Technologies Inc. is an American technology company headquartered in San Francisco, California, United States, operating in 570 cities worldwide. It develops, markets and operates the Uber car transportation and food delivery mobile apps. Uber drivers use their own cars although drivers can rent a car to drive with Uber. It was founded on March, 2009 by Travis Kalanick & Garrett Camp. It generates a revenue of US$ 6.5 billion .

How does the model work?

  • The basic difference between Uber's business model and other taxi company's business model is that Uber cabs are actually privately owned vehicles and owner of these vehicles are registered with Uber as drivers, whom Uber refer as‘partners’.

  • Uber operates as a taxi aggregator. It takes ride requests (cab bookings) from retail customers via an app and passes it on to the available set of drivers at that moment, again via a driver facing app. Commuters pay for the ride out of which driver and Uber keep their respective shares.

  • Uber works as a marketplace and connects Cabs to consumers. It is a technology company and with its system finds the nearest available cabs, giving alternatives among various priced and type of car. Uber doesnt let customers make payment in cash and deducts amount from credit card or through linked wallet. It keeps 20% of the total bill and gives back the remaining 80% back to owner/driver. This is normally done weekly. Uber has no role in who is driving the vehicle, it can either be a driver or the owner of the vehicle himself/herself. Earnings differs according to location(as does the fare).

What makes it so special?

For customers :-

  • Quick Service: No need to wait for a taxi for long times.

  • Discounted/Free rides: Free rides on certain occasions and discounts from time to time.

  • Cheaper: Prices lesser than the normal taxi fares.

  • Comfort: Uber’s tagline says – Your personal driver. It lets customers travel in style.

  • Upfront Pricing: Uber displays the fare of the trip at the Trip request time upfront. If User accepts the price only then the Trip is requested. The prices mostly remains fixed for common places like Airport etc.

For drivers:-

  • Better Income: Additional source of income.

  • Flexible working hours: Flexible working schedules. Can work part time or simply whenever they like.

  • Quick and Easy payment: Easy payment procedure.

  • Uber pays for availability to be online, even if they don’t get any request.

Action oriented insights

Uber’s business model faces certain threats due to lawsuits. In the United States, Uber faces lawsuits and California state regulators ruled that an Uber driver should be treated as an employee rather than a contractor, although that has yet to be extended to all drivers in the state working on the platform.

Another looming problem is regulation. The European Court of Justice, the European Union’s highest court, will decide on whether Uber is a transport company or just a digital service; if it is judged to be the former, it will need to comply with stricter licensing, insurance and safety rules, lifting its costs significantly in Europe.

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