Uber in Waterloo Region

[ookpik]

$109 plus probably some tips at 10 hours -- say $130 + $20 in tips for $150 total at the end of the shift. $80 for car rental, say $20 for gas to end up with $50.

The Uber driver with the same number of rides might only earn $75, less 20% for $60 net.  $20 for gas, and he ends up with $40, and he still has to pay for a car.

It depends on how typical the $1,000/week ($200/day) that the Uber driver reported is in practice. He said that was a good week so maybe $100/day is more typical. Presumably that would be net of Uber's 20% commission, but it's not clear. Both Uber and regular taxi driver have to pay for gas.

The taxi driver, even with tips, ends up with about half of that. But of course the Uber driver has to pay for his car.

Two important differences between the two models.

1. The taxi driver has to ante up $80+ per day even if he gets no fares. He's also at the mercy of the dispatcher who could make bad days happen. Uber counts that their driver is already paying for his car for his own personal use. If Uber's insurance covers the driver when he's working then his only extra cost is gas when the Uber app has fed him a fare.

2. Tips. The taxi driver gets an unspecified income stream from tips. Uber doesn't collect tips. Do any passengers tip with cash? Is there any chance that Uber might introduce an optional tip amount in the app so that tips could be paid by credit card?

Clearly for Uber to work for the driver, he has to be able to get substantially more rides than a taxi driver, so the effectiveness of the Uber app is the key there.  An oversupply of drivers won't force prices down but it'll reduce average driver earnings so that will likely reduce the diver population in the longer run.

The current taxi model limits supply by way of taxi plates. That keeps taxi fares high, keeps the plate owners rich and forces drivers to economize, perhaps cut corners. (This is similar to the various dairy and poultry marketing boards that limit supply and keep prices high. The license owner wins. The consumer loses. The difference is that farmers generally own their "plates" and do their own work while the taxi owners hire slave labour to do all the real work.)

The Uber model will balance supply and demand. Prices will come down until it's no longer feasible to be an Uber driver. Quality will be self-policed by way of the ratings system as well as by changes in regulations. The consumer will benefit in the long run.

Interesting times.