Can Uber / Lyft be economically viable?
Uber and Lyft are expensive and the average price for a single ride is above $10. Driving is going to be much cheaper, without doubt, but what about the opportunity cost of driving when you could have been using ride share?
This might be the most Silicon Valley blog post, but hear me out for a second. Maybe, just maybe, these services can produce economic profit. We're going to use Mr. Stewart as an example because we all love him dearly. Let's say Mr. Stewart lives 10 minutes away from work and is charged $11-15 for an Uber. Lets also declare that Mr. Stewart is a skilled commission worker that gets paid for work he does in his free time. Maybe he does economic's analysis for a local startup. In order for the economic profit of taking that Uber to be normal then his (Hourly pay)-(Cost of Driving)=Uber Fee. Mr. Stewart drives a car with solid mileage of 30 mpg and in 10 minutes he will drive a reasonable 3.5 miles. Thats about 50 cents. x(1/6)-(.5)=$13 is a reasonable equation where x is the hourly pay. It is divided by 6 because our ride is 10 minutes and not a full hour. $81 is the average hourly pay he will require in order to justify taking Uber to school given his commute. If you worked 8 hours a day, 5 days a week, 4 months a year then this would equate to a wage of about 150k a year. If you make any more than this it might actually be economically beneficial for you to take Ubers and work as a passenger. Obviously it depends on your specific work and if you can be as efficient while in a car with limited resources.
Obviously most people probably won't do this, but it actually can be more productive depending on your specific circumstances. I think this also sets up a lot of possibility with self driving cars in the future which, depending on their extra cost, could be a worthwhile investment simply for the capabilities of working while being driven!
Amazing Benjamin! Another brilliant blog post. I found it interesting how you explored a way where you could run your life like a business, aiming to earn a normal profit. If you could make taking an Uber economically viable compared to driving to work, imagine how much cheaper it would be considering you wouldn't need a car at all. Granted, you would require a specific job and skill set, however, you could live your life without a car, working everytime you're in an uber. This would mean you would no longer need to buy a car, pay for insurance, and pay for maintenance and repairs. For some people it makes sense to live their entire life off of uber.
ReplyDeleteThe points you made is really interesting. It raises an interesting connections to transportation companies such as Lime and other companies who offer similar services. Although on average they have a higher cost in comparison to regular bikes and scooters, but the fact that Lime vehicles are all electric makes up the fact that using Lime product for a short amount of time will be cost -efficient. Similar to Uber vs buying a car, the short run utilization of such products can be efficient.
ReplyDeleteGood stuff Ben!! I like how you did the math as an example to prove how Uber and Lyft can be economically beneficial. My cousin got out of college a couple years ago and because he is in San Francisco, the cost of a car, gasoline, insurance, and parking, makes sense for him to commute using Uber. This post also made me curious about the competition between Uber and Lyft. I found that although Uber has a 3 year head start over Lyft, the constant scandals of Uber have, in a way, evened the playing field.
ReplyDeletehttps://www.surveymonkey.com/curiosity/uber-vs-lyft-3-data-points-that-help-explain-the-rivalry/
This post is interesting, because while $150k is a lot of money per year, there are a lot of people in this area who do earn that much money, yet rarely use Uber. I think Uber is necessary in cities like San Francisco, where finding parking and using a car is very difficult, but is impractical for the suburbs and rural areas, where Uber drivers often don't have passengers in their seats, so the opportunity cost is higher than their revenue. Because of this, it is often much more difficult to find Ubers in areas like Mountain View, and they are much more common in San Francisco. I think Uber and Lyft are going to continue to be successful, but it's just not profitable to try to expand Uber to suburban areas where nearly everyone drives cars.
ReplyDeleteGreat post. Being in the silicon valley and with the prices of rent going up, many people may not have cars which can cause for the high demand of uber's and lyft's. Heavy populated areas like San Francisco, Oakland, and San Jose make it even harder to find parking. Speaking for the bay area, Uber and Lyft can be vital for one's transportation making these travel companies here to stay.
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