How Uber Works: On Demand Taxi App Business Model Revealed

Published In : Brand Stories December 25, 2018

Earlier known as UberCab, Uber was established in 2009 with the aim of disturbing the transport services. The founders, Travis Kalanick and Garrett Camp, were both entrepreneurs before they founded Uber.

Uber is a disruptive business and has absolutely played havoc with the taxi industry in the major cities around the world by tearing up the rulebook.  Ever since it is in action, the Uber business model has concentrated on being at the top of the competition and so far they have been successful.

If you want to know how Uber works, who uses it, how they use it, and how much money the ride-sharing giant is bringing in, then read our compilation of Uber Business Model below.

Uber Stats and Facts: Funding and Major Milestones

  • Founders: Travis Kalanick and Garrett Camp

  • Valuation: More than $72 billion

  • Total employees: 12,000+

  • Riders per day: 15 million

  • Uber drivers: 3 million

  • Revenue: $7.5 billion (2017)

  • Cities: 633 cities

  • Countries: 78 countries

Uber Success Timeline

How Uber Makes Money – Revenue Generation Model

Every taxi ride ends with rider giving money to the driver which is the major source of income for taxi businesses worldwide and Uber is the same. The Uber revenue model has the same source of the income as of now. But, the thing that separates the Uber revenue model from the revenue model of an ordinary taxi business is the number of rides.

On a normal day, Uber gets 1 million rides. Now that’s what affects its total revenue. Uber additionally has different sources through which Uber pricing model is chosen. Let’s see what that is:

1. Uber has added different car models to the fleet: The pricing model of Uber for every vehicle relies upon the size and level of luxury of the car. From ‘special SUV rides’ to ‘mini rides’, Uber brings to the table all at various price ranges.

2. Uber applies price surging: When the requests for rides increase, the fare automatically rises. This variation helps Uber in attracting more drivers and creating gigantic revenues.

3. Other Uber rides: Uber company structure comprises of individuals who are continually adding new features into the business. The most recent rides they have included are helicopters, boats, and delivery services. Obviously, these are simply confined to geographies for the reason that Uber need to explore as much as it can.

Uber Business Model

How Uber Works?

Uber collaborate with taxi drivers to provide taxi services which can be booked by customers utilizing the Uber mobile application. The Uber business model and plan began with one city in the USA and is now spread in 633 cities all over the world. Here is the clear picture of how it works:

Uber Business Model Canvas

  • Uber serves a gigantic customer segment which incorporates all ages and a wide range of customers.

  • The users simply need to open the application and request a ride. This is the place where pick up location, destination and car size is chosen (luxury, medium or mini).

  • Once the user sends the request, each driver in the range is notified and once a driver acknowledges the ride, the driver data is sent to the user.

  • The user can track the route with the mobile application. The meter in the car starts when the ride starts and is stopped after reaching the destination.

  • Once the ride is over the rider needs to pay the amount charged to them. The application computes the cost according to the distance and base fare.

Key Takeaways from Uber Business Model

1. Be Prepare for Every Scandal

While Uber has earned a great reputation, it has additionally confronted criticism over a couple of scandals. A few Uber users claim that driver had cheated them out of money or assaulted them sexually. But, Uber managed all of the issues with full preparation.

What did you learn? Be proactive about the scandals that could influence your organization and have a plan for how you’ll deal with any that emerge. Now isn’t an ideal time to conceal your skeletons away in the closet.

2. Find Genuine Solutions to Real World Problems

The organizers realized that there are various infrastructural issues with public transportation in urban areas, which can make it troublesome for individuals to get around effortlessly and taxi companies don’t typically offer the best services. Uber fulfilled this need by giving rides at a cheaper cost than other taxi options at a higher level of service.

What did you learn? Users give their business to the organizations that take care of the issues they’re confronting. Make it your need to provide genuine solutions to issues your rivals have neglected.

3. Be an Early Adopter

Being the first entrant into a new market is essential. Uber was the very first ride-sharing organization, which enabled it to cut out a large share of the market. That’s why the users will almost always consider Uber first when they think of ride-sharing organizations – and that is the sort of brand recognition you can’t purchase.

What did you learn? You can gain a solid competitive edge by being the first organization to advertise. Keep in mind the saying, “Prepare, fire, aim.”

4. Minimize Infrastructural Requirements

One reason that Uber has grown so rapidly is that it doesn’t have similar overhead costs as conventional taxi organizations. A less complex infrastructure also enables organizations to adjust to changes all the more rapidly, empowering them to avoid some of the issues that would otherwise hinder growth.

What did you learn? Controlling expenses is a basic part of maintaining a business, so strive to be as cost-effective as possible. Each company must maximize its cost-effectiveness without sacrificing its main vision.

5. Expand step by step

The Uber business model and plan began with one city in the USA and is now grown to be spread in 633 cities all over the world. Uber began with taxis however now even has helicopters, boats, bikes and different means.

What did you learn? Do not include everything in your business model in the first go. Extend your business step by step.

Wrapping Up

There’s no uncertainty in the fact that Uber has brought a revolution not just as a taxi organization but as a business model where they reach out to serve clients at their location. A number of startups have already made their application like Uber and numerous others have made little iterations to launch new businesses in different industry verticals.

Do you want to create an On Demand taxi app like Uber? Get in touch with us and we will help you create the next big thing.

Taxi App Business Model

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Why Hailo – an On Demand Taxi App with $100 Million in Funding Failed in the US

Published In : Learn from Failures November 29, 2018

If you’re planning on developing a mobile app, there are chances of you getting failed.

According to a research by Statista, 21 percent of apps downloaded by mobile app users worldwide were only accessed once during the first six months of ownership.

On demand taxi app

According to Wall Street Journal, just 60% of new businesses survive to age 3, while just 1 of every 10 makes it for 10 years or more. So, an application failure is without a doubt not surprising. Maybe not, for many. But, for the app developer who invested his hard-earned money in the development and marketing process of the app, it is heartbreaking.

When an application flops after putting considerable efforts, time and money into its development, everybody is responsible. And possibilities are great that the entire project will after that be canned. Mobile application failure goes a long way beyond a bug or error that can be solved. There can be numerous issues that can cause an application to fail. Finding them out won’t really make your application insusceptible to failure, but it will enable you to proceed cleverly and avoid signs that could make things take a dreadful turn.

To figure out such things, we decide to study the failure story an on-demand taxi app – Hailo.

What was Hailo – an on Demand Taxi App Like Uber

on demand taxi service

Hailo was a British technology platform that matched passengers and taxi drivers through its mobile phone application. Their on demand taxi booking mobile app used to act, look and feel a lot like Uber. Established in London in 2011, the Hailo taxi service was accessible in 16 cities in 2013. The main goal of Hailo before entering the market was to make hailing a taxi as easy as sending a text – with just a few taps.

Earlier its services were restricted to London where it did incredibly well. It empowered more than 3 million rides for travelers from more than 30,000 enlisted cab drivers. When its branch office opened in New York, the organization already had 2.5 million users.

In spite of gaining such noteworthy traction and even having $100 million in funding, it was compelled to leave the U.S. market soon because of a few reasons.

The Reasons behind the Failure of Hailo

Hailo worked well in London as an on demand taxi service. But in NY, it failed. The company decided to take the yellow cab market of New York and get existing drivers to utilize their application for connecting to potential travelers. The idea was to use the existing base in order to get the advantages. But, it didn’t worked. Only a few out of New York’s 40,000 drivers signed up for Hailo. Why? Here are the reasons:

They Paid No Attention to Market Research

Hailo wasn’t right to assume that the yellow taxi drivers in New York were equivalent to their British counterparts. The facts they didn’t consider before entering the market are:

  • London is known for being one of the world’s most confusing cities, so most drivers use smartphones (which are the major requirement for an application to work).
  • Drivers in NY often don’t require cell phones because of the simple route of the city’s layout.

All that happened because of poor or no market research.

They Made Faulty Assumptions

They made a wrong assumption that NY cab drivers required help in finding travelers and proper fares; however, this wasn’t the situation. The yellow taxis in NYC have been ticking along fine all alone, and Hailo simply wasn’t that essential.

They Paid No Attention to Their Mobile App

Hailo’s mobile application wasn’t good for the specific audience of NY as they trusted it would be. Hailo additionally confronted technical issues in New York. Since the city at that time used to work with payment processors using outdated technology, Hailo later on realized that it is hard to integrate its services with them.

They Paid No Attention to the Competitors

At the point when Hailo was prepared to release in New York, a bundle of other similar services were additionally lined up and Uber was its greatest rival. The organization’s unique plan was to offer amazing prices while concentrating on the yellow cab market, which left the higher-end market to Uber.

It ended up losing the competition when Uber turned out with stunningly better prices (particularly for its UberX service).

They Were Unable to Compete

The value proposition of Hailo was specifically challenged by market pioneer Uber when it revealed its less expensive UberX service. Their one strength (London) weakened after Hailo started charging a base fair of £10 amid peak hours.

Key Takeaways from Hailo’s Failure

1. Market Research Is Crucial

Your failure is destined if you proceed by not researching what is possible or needed in the market. Before entering the market you should make sure that the market position can support your business goals. Know your users, their preferences, and how they will probably interact with your app or product.

2. Testing the Market Is More Crucial

Market research is fine, but the genuine test is how the target audience will react to your product. Hailo would have spared itself by not making suspicions that drivers in NY require their mobile application. Before launching an app, ensure that the users need it.

3. Technical Issues Can Spoil Your Business

Anything that causes errors, slow performance, or crashes an application can prompt issues you can’t manage. Understand what technologies your application should incorporate with, and work accordingly. Also, you should ensure that your application can be utilized wherever you are intending to launch it.

4. Poor Planning Can Lead to No Adoption

The idea behind Hailo wasn’t actually unneeded; it simply was not packaged in a way that appeared well and good for adoption and usage. The lack of planning behind Hailo lead to no adoption – neither by taxi drivers nor by those requiring a taxi.

5. Be Prepared For Everything

Changing ideas to mobile apps is fine. But you must be ready for whatever comes next. To encourage continued usage of your application, changes or tweaks in what you offer is crucial and that Hailo never did. You never know, when the competitors will enter with an intention to kick you out of the market.


Hailo – an on Demand Taxi App is a prime example of why user and market research is so critical in mobile application development.  From its failure, we can figure out how necessary it is to uncover presumptions and generate proofs amid the research procedure. The organization could have avoided some of their slip-ups if they had more research to get a better understanding of the market they were entering. Now, Hailo is merged with My Taxi but, it is still a sad end for the British taxi company.

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