Business And Revenue Model of Uber

Uber Technologies Inc. has ruled the world since its inception by becoming the largest global taxi technology company that operates Uber App. It provides a 24/7 non-stop on-demand taxi hailing service, which can be easily accessible at smartphones. It has its headquarters in the San Francisco, USA. Despite owning not even a single vehicle, it is the world’s largest company which has a valuation of more than $50 billion and funds of $10 billion.


Early Business Years

The idea of Uber sneaked the minds of Travis Kalanick and Garrett Camp in 2008 when they faced trouble hailing a cab on a snowy evening in Paris. So, their minds popped with a simple thought- what if we tap a button and get a ride.  This idea actually changed the life, and they came up with an idea of UberCab in 2009. The initial prototype was built by Garett, and some of his friends and Kalanick acted the mega advisor to the company, but officially, the application was launched in San Francisco in 2011. Initially, the services provided only a black luxury car for the user whose price was 1.5 times higher than that of a regular taxi. Soon, the name was changed from UberCab to Uber after some complaints from SanFrancisco taxi operators.

The initial development of the Uber app consisted of the creation of think tank which was constituted of a nuclear physicist, a computational neuroscientist, and a machinery expert which worked as a demand predictor for private hire car drivers and told where demand is highest.

Success Timeline

With each passing year, the use of Uber Cabs is mushrooming at a fast rate, which is relatively decreasing the rental cars usage.

Uber's Usage Comparison

From a limited number of premium black cars to providing a variety of services in a plethora of cities, Uber has faced a continuous growth by leaps and bounds.

Uber's Success Timeline

Geographical Diversification

From providing premium black cars in a few metropolitan areas to expanding with the operations in 633 cities and 60 countries worldwide, Uber has left its mark all over the globe. Be it a ride, a sandwich, or a package; Uber gives people what they want on a single click at their doorstep.

Uber's Global Diversification

Uber Business Model

  • Elements of Uber Business Model

There are three primary elements of Uber Business Model:

Taxi Drivers

To become an Uber driver is not a herculean task, as all you need is a driving license and a car to apply to Uber. A shortlisting process is done at the Uber offices, after which the drivers are enlisted and provided with Uber phones for connecting to passengers.


To book their respective on-demand services, users need to register through their smartphone on the app. Uber provides the details of the driver and the estimated fares to be paid at the destination. Moreover, tracking of their respective booked rides is also available for passengers.

Fare And Payment

The ride fares are directly dependent on the car type, distance, and peak hours. The estimated fare is provided to the users at the time of booking a ride. However, the fares may face a hike during the peak hours and lower down in the off hours. There are various payment modes kept for the ease of the users, i.e. by debit card, credit card and wallets like Paytm in India.

  • Uber Target Audience

Being a one-stop solution for every need, Uber’s most targetted audience is full-time job seekers as they are amongst the maximum ratio to use Uber Cabs. Whereas college goers find it useful in case of unavailability of the other means of public transport. For tourists, it’s bliss, as Uber has made their hustle bustle from one place to another enormously smoother. It has made various activities of user like attending an important meeting, parties or events when running out of time or escaping on a rainy day much comfortable.

Uber Target Audience

  • Working of Uber

The basic requirements to book a ride on Uber is a smartphone and an internet connection.

Step1: The first step in the working business model of Uber is to request a cab demand. This can be done quickly through the app by providing the pick-up and drop location.

Step 2: As soon as the request is sent, information regarding the user is sent to the driver, and it is dependent on the Cab driver to accept or reject the ride according to their availability and convenience.

Step 3: The acceptance and rejection are notified to the user, and further, the user can track the cab’s route. Also, an ETA (Estimated Time of Arrival) is shown on the screen. The meter starts in the app itself at the start of the ride.

Step 4: Once the ride gets over, the customer receives an option to rate their trip. This step is the most important one in the completion of the ride as it helps the company to know about the quality of the rides delivered and also for the users.

How Uber Work

Uber Revenue Model

Normally, the cash collected by each journey in a ride is the only source of revenue for a cab company, but Uber’s revenue model is based on a variety of factors. It makes money through the customer’s trip commission. Uber takes around 20 % of the fare charged to the customer, and the rest 80% is given to the driver. The company sometimes charges 1.5X, 2X, 3X or even more based on the demand of the passengers. The trip fare is a combination of travel time (calculated in minutes), waiting minutes, and distance cost. It also makes revenue from the cancellation of rides by the passengers, which is collected in their next ride and by advertising other products on the app.

Uber has provided multitudinous cab models for their Cab services. Moreover, their pricing algorithm used in the variation of cab fares, i.e. when the demand increases, per mile prices, are automatically increased has led to a great increase in their revenue.

Uber Business And Revenue Model

From the past few years, it has also expanded his services by providing various service levels and types, but not all the services are available in every region. Some of its products are: UberKIDS: equipping a car with child safety seat, UberPETS: gives pet transport, UberWAV: provides a wheelchair accessible vehicle, UberMOTO: offers transportation by motorcycle, UberBOAT: gives a water-taxi service, UberEATS: provides meal delivery from participating restaurants within 30 minutes, UberRUSH: includes a courier package delivery service, and many more on the list. This diversification has added to their revenue a lot.

Uber's Various Services

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