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How Uber Works: On Demand Taxi App Business Model Revealed

6526 Views | 1 min | Published On: December 25, 2018 Last Updated: June 17, 2020
updated Business model of uber explained

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: 19,000+

  • 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 the 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 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 the 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 collaborates 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:

online cab service business model
  • Uber serves a gigantic customer segment that 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

If you are going to learn how uber works, you’ll want to learn how uber endured scandals. While Uber has earned a great reputation, it has additionally confronted criticism over a couple of scandals. A few Uber users claim that drivers 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, aim, fire.”

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. Thereby minimalistic infrastructure requirement is the next big thing that you can learn from how uber works.

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 how Uber works and the revolution brought by Uber is not just as a taxi organization but as a business model where they reach out to serve clients at their location. Several startups have already made their applications 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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