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Uber Technologies Essay

1548 words - 7 pages

Uber Technologies

What is Uber Technologies?
Uber Technologies, Inc. was founded in 2009 by Travis Kalanik and Garrett Camp as a way to solve their own transportation problems in the traffic congested city of San Francisco where it is still based and headquartered. Uber Technologies offers an on demand car service application for smartphone users that links drivers with people needing a ride. According to Jim Makos of Pestle Analysis “It brilliantly connects the transportation industry with technology via its ride-sharing app.” With the click of a button on the application you can ...view middle of the document...

Uber CEO, Travis Kalanik said “It was just a very simple idea. And when it first got going, it was really a lifestyle company. It was about us and our 100 friends. You know, push a button and get around San Francisco like ballers. So what it is in practice, it's an unmanned car service? You get your smart phone out, you push a button, and in five minutes a car arrives and takes you wherever you want to go.”

What is Uber‘s Pricing Strategy?
“By being innovative with your pricing strategy, just like Uber is, you have the opportunity to make your competition sitting ducks.” commented by Rafi Mohammed, author of "The 1% Windfall: How Successful Companies Use Price to Profit and Grow,"
Uber works with three pricing strategies; fixed airport rates, standard fees and dynamic pricing. For example, the standard fee from University of La Verne Ontario campus to University of La Verne main campus is $14-$19 using an UberX type economy size car, price increases anywhere from $20-$50 on larger or more luxurious vehicles whereas, Yellow Cab would charge a stiff $42 for a regular cab service to the exact locations, that is about a 50% savings with no option to select a larger or more luxury vehicle. Ubers cost saving pricing coupled with its convenience factor provides a strong competitive edge over other for hire car services. Besides their competitive pricing structure, Uber does not charge extra for additional occupants as oppose to traditional cab services that usually charge additional occupants and per minute/mile rates.
The cashless transaction also gives Uber a leading edge, especially with their business customers, this allows them to entertain clients without having to pay for the service or a tip in front of the client and offer the client a safe ride in a luxury vehicle giving them the impression that you are astute in your business practices. All that is needed is that you download the application and set up your account with Uber which requires a credit card to be kept on file to be charged every time you set up a ride. Keeping your account updated with Uber makes the transaction quick and simple.

Uber’s use of dynamic pricing strategy has caused uproar and has been very controversial because they charge higher premium rate during high volume days like New Year’s, Thanksgiving, St. Patrick’s Day or Halloween and during severe weather conditions. According to Uber’s website, “Uber rates increase to ensure reliability when demand cannot be met by the number of drivers on the road. Our goal is to be as reliable as possible in connecting you with a driver whenever you need one. At times of high demand, the number of drivers we can connect you with becomes limited. As a result, prices increase to encourage more drivers to become available.”

Although Uber notifies their customers of the increased pricing structure when ordering a car...

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