The logics of Uber’s new pricing model

Uber decided to change the way it manipulates the fares, moving to a system that the consumers ‘willing to pay’, based on few factors. But this alters the way of collecting the fare from people is said to be a common practice called ‘price discrimination’.Price discrimination is an attempt of the firm’s to grab the difference between the value of the consumer put on a product and how much they actually pay. They do this by charging different pay to the different consumers and utilize the difference in willingness to pay. If this change met the people then the society as a whole can benefit according to the economic theory.

In case if Uber’s new pricing means it arrives into new market or reduction in the customer waiting time, so the price discrimination could increase society’s overall welfare. The Price discrimination may in many forms like the Coca-Cola’s infamous vending machine, selling the movie tickets on low price during working days, Pharmaceutical companies charge different prices in different countries and car dealer’s discount.

The only surprise that Uber hasn’t implemented such system likes this before and cleverly mimics a free functioning market along with the surge pricing. It charges different types of consumers different prices based on the service or for the same product. The main objective of the company is to utilize the “Willingness to pay” between consumers and thereby they get a chance to increase their profit. It describes the maximum amount a consumer could pay for a particular service or product, because the given consumers differ in income.

 

 

Uber accepts underpaying drivers

Uber admits its mistake in the way calculating its commission, at a cost of ten million dollars to its New York drivers. The company tries to overcome its mistake and make the drivers to the whole for the lost of earnings. The Uber’s for the United States and Canada, Rachel Holt said in a statement that they were committed to paying every driver every penny they owed with the interest as soon as possible.They contract with the drivers appear to allow the company to deduct only its twenty-five percent commission from the fares, not including the taxes. But a lawsuit filed by the drivers in New York last year that they put the tax burden on the drivers to swallow a practice group said. The document gone through by the New York Times also noted the point to such practice which could have the cost of hundred million dollars of the drivers.

Richard Emery, a lawyer of New York who filed a case in 2009 involving the similar issue rose by one of the taxi drivers that the state authorities might be unwilling to take over the case because the state does not cheat out of tax revenue.

If the ruled by the judge the case, then the drivers may awarded up to doubled the amount of the wage deduction, if the drivers treated to be employers rather than as independent contractors. Since 2015, from the beginning of Uber, it has dispatched one hundred twenty-five million rides in the New York City.

Google might be sitting on a $70b competitor to other autonomous company

Google’s autonomous car unit could be more valuable than other General Motors and Ford, Morgan Stanley analyst said. The worth of the self-driving car Waymo is about seventy billion dollars, unit of Google’s parent company Alphabet. This valuation comes after Waymo joins with the partnership with the US second biggest ride service, Lyft in order to launch a pilot program for self-driving cars. The partnership will be the encouraging sign for the Waymo could put more cars on the road and let develop a path for the autonomous transition.Based on the data from the Bloomberg, that the expected “enterprise value” of the Waymo about seventy billion dollars worth more than the General Motors as now forty-four billion dollars, Ford of thirty-five billion dollars, and Tesla- fifty-one billion dollars. It is expecting a self-driving car can drive up to sixty-five thousand miles by each one within a decade. Enterprise value is the measurement of a company based on the market capitalization, debt and cash- a theoretical cost to buy a company’s business.

Morgan Stanley analyst Adam Jonas wrote in another note that their internet team argues Waymo was a potential spin-out candidate that could be worth seventy billion dollars worth, competing for the talent and capital versus Tesla. The enterprise value of the Alphabet would be added around the twelve percent to the Google’s enterprise value roughly. Event assuming that the Waymo cars are involved in the fewer ninety crashes than the average human driven involved five per year wrote Nowak and Jones.

 

Fiat partners with uber, Amazon and Google for its automated cars

It is no mystery that most of the major automakers in the world are developing their own version of self driving cars. But it is never easy to get them on road given their cost and safety concerns surrounding them.
So companies tie up with taxi aggregators and delivery service providers like Uber and Amazon. Fiat has expressed its interest as the main supplier of self driving cars for both of them. Uber has already started testing with Ford’s self-driving fusion car in Pittsburgh and now fiat may supply with more numbers. Uber CEO Travis Kalvanick has stated his willingness to buy Tesla cars if they achieve full automation capability. Amazon CEO Jeff Bezos while speaking at the code conference stated the lack of delivery options in peak times and holiday season. Having a driverless car fleet will substitute the lack of availability.

However Amazon has its inclination towards drones for delivery of small items and cars only for bigger products.
Fiat has also partnered with Google to test their fleet of self driving cars, this will double the fleet of the company to 200 cars. Fiat will provide 100 Chrysler Pacifia van which will be mounted with Google’s autonomous car technology. Google’s head of self driving cars John Krafcik stated that the opportunity to work with fiat engineers will accelerate their efforts to develop self driving cars. Partnerships of these sorts are bound to increase with automakers trying to choose between Google’s technology and their own in house system.

uber and Lyft for grocery delivery services

Walmart is the largest retailer in the world; Uber and Lyft are the biggest players in network based transportation or gig economy or in many other names by which they are known. Both the companies are aware of the fact that they need to develop better streams of revenue for sustained presence in the industry and both the companies have fierce competition in the market. Walmart has competition in grocery sector from Target, Costco and now the latest being Amazon online grocery services called Amazon fresh. Uber and Lyft are fierce rivals and they have competitors coming up every day in every part of the world.

These companies are collaborating to provide grocery delivery services, Walmart announced this during their annual shareholder’s meeting. In select locations Walmart will introduce this feature through which the customers can place their orders online. Personalized shopper will collect the items and will transport it through uber or Lyft. The customer will not be interacting with anyone throughout the process and will be sent notifications regarding the time and location of delivery.

Each delivery will cost around $7 to $10 for the customer. The cost is affordable given the hustle involved in going to a grocery shop buying and coming back home. The details regarding the partnership is yet to be announced, like how much uber or Lyft will be paid per delivery and which locations it will be offering the services. Walmart has the advantage of being present in 5,000 locations across U.S which will make its delivery service faster and efficient compared to other similar services.

Autonomous cars are soon going to hit the street

The San Francisco based online multinational transportation company Uber announced about their driverless cars. The company also had set up an Advanced Technology Center in Pittsburg to build the self driving car. On June 14th, 2016 the Chief Producer officer at Uber, Jeff Holden spoke at the conference about the driverless cars and said that the ride sharing company will launch their service sooner than the expected time period. The self driving cars are not replaced the drivers because the autonomous car service will hail only in some cities and thus the drivers who are working with the company need not worry about the new feature. The ride sharing giant hired software developers from the National Robotics Engineering center, Carnegie Mellon University to build the self driving cars.

In May, the app based company did a test ride with the driverless Ford Fusion car on the roads of Pittsburg. The officials in the past said that they ran the test ride to make sure that the technological implementation was correct and also to check whether everyone on the road like the cyclist, pedestrians and other drivers were safe. The ride sharing company partnered with the Japanese automaker, Toyota Motors earlier this year. This partnership will speed up the process of developing the driverless cars and launching the service for public transport because many other car makers in the industry have partnered with other ride sharing companies to develop driverless cars. The main target of the company is to provide reliable service for the customers in lower price.

Rides can book their Uber ride in advance

The ride sharing company offers the riders to schedule their rides well in advance. The Head of the product at Uber, Russell Dicker said that many riders wished to book an Uber ride in advance so that they can have an assurance that they can ride back home without any worries. The Scheduled ride feature is introduced in Seattle and the company said that they will expand the feature in other cities as well. The business customers and people who have a business profile are given the first preference in the scheduled rides. During the scheduled ride, the riders can book the ride half an hour before they ride to thirty days in advance from their mobile app. The riders can select their preferred trip time, the pickup point and the destination. They will receive an advance notification twenty four hours before their ride and they will receive their second notification half an hour before the ride.

They can modify the location or they can cancel their ride thirty minutes before their ride.
When there is a surge pricing while the driver leaves for dispatch, the riders will get the notification about the surge price. Then the riders have 5 minutes to decide on whether to ride the cab with surge price or cancel the trip without paying any fine. Lyft was the first ride sharing company to introduce the Scheduled ride feature and launched a test ride in San Francisco before offering the service in other cities. The only difference between both the services is that Lyft allows the riders only to schedule the ride only to a maximum of twenty four hours.

Relationship between GV and Uber

In 2013 Uber received three hundred million dollars funds from the Google Ventures. Both the tech company and the ride sharing company are working together to build the autonomous automobiles. But when Google’s parent company Alphabet’s senior Vice President David Drummond joined the ride sharing company’s board, since then they ramped up the driverless car designing. In a recent conference the CEO of Google Ventures, Bill Maris said that the relationship between both the companies is healthy and that the ride sharing company is working with Google Maps to improve their navigational feature. He also said that when two big companies partner together they will either compete or cooperate with each other’s business. Google Ventures CEO plans to meet with the ride sharing company’s senior Vice President of business Emily Michael and the CEO Travis Kalanick.

Last year, many top rank employees from Google moved to Uber like Christoff, who supervised former Google CEO and managed the East coast team, the communication head Rachel Whetstone, Manik Gupta worked with Google Maps, Google Express founder Tom Fallows. So Bill Maris said that he has many of his old friends in the ride sharing company. The app based company’s stocks that were bought by the Google Ventures are not sold in the market. The officials from the company said that they do not have any plans to sell the transportation company’s stock. GV CEO said that the transportation company has the potential to widen their network and transform the transportation service but are not aware of their strength.

Uber is going to launch a hotline to reach their service

America’s leading ride sharing company joined with the Pinellas Suncoast Transit Authority (PSTA) and tested a pilot program in which people without the smartphone can call the hotline and book the Uber service. The senior planner at the Pinellas Suncoast Transit Authority, Christopher Cochran said that the pilot program is a local program that will benefit the low income citizens who do not possess a car or who are unable to access the transit system in their area. Apart from gaining customers, the company will become the next public transit.

The spokesperson of Transit Center, Jacob Anbinder said that if the online ride sharing company is planning to move into the public sector and wish to cover the people who do not have a smartphone or the mobile app, they have to offer more to attract the vast crowd. Pinellas County was the first county to subsidize the ride sharing company to hail rides to and from the bus stations to make their transit system accessible to the people. According to the pilot plan the residents who do not have access to the transit will be given a taxpayer subsidized ride by the company every month to trip within the service area during the daytime when the residents have an emergency situation. The PSTA received three hundred thousand dollar funds and they will use it for the new program. And the ride sharing company will provide the software for the call-in feature.

The PSTA reached out to Uber service after they fail in building a light rail system to reach the bus service station. The ride sharing company and the transit authority of Pinellas County will launch the new pilot plan on July 8th, 2016.

Investors join together to compete against Uber

One of the ride sharing companies is trying to compete against its global competitor and in talks with the investors to raise one billion dollar. The leading online transportation company in India is the OlaCabs which is known as Ola, Uber is trying to beat Ola in its own country. The existing investors of the Indian ride sharing company are Sequoia Capitals, DLT Global and SoftBank are participating to raise money against Uber. And two more investors from the United States have come forward to fund the company. Didi is the global investor and collaborator of Ola and they will also join the other investors to compete against the rival American company. This will indirectly build a competition between the two tech giants Apple and Google because the tech company Apple invested one billion dollars in Didi while Google’s investment group Google Ventures invested funds for the American ride sharing giant in 2013.

The SoftBank is the common investor for the Indonesian car hailing company Grabtaxi, Lyft, Ola and Didi is a major source to compete against Uber. This is the first attempt of the Indian company to raise funds against the rival company because they plan to spend their funds in India. The American ride sharing giant received $3.5 billion from the Saudi Arabia and the company’s President for India, Amit Jain said that the company has a fifty percent market share in India and they are planning to invest their recent funds in the country to become the market giant in India. A ride sharing company that has more number of drivers and riders becomes the ultimate winner in the industry and both the ride sharing companies Uber and Ola have the same business model and are having the same space. So the company that increases its market among the drivers and riders becomes the winner