The lead itself is valuable, but Uber doesn’t have to incur any capital costs associated with the car.
For riders, I believe Uber vets drivers to make sure they aren’t going to take their passengers to some isolated cabin in the woods or anything.
What is their margin on that?
Thanks,
Rob
Most obviously, the IT infrastructure associated with the app and the website. Creating and maintaining that isn’t free.
Uber has to do a lot of checking to ensure that their drivers are safe and reliable. The family of the first person that’s killed because of a intoxicated, ex-felon Uber driver will sue the pants off the company. It takes time and effort (= money) to get everything right. Uber’s margins are probably pretty good, but they need the 20% to cover all of their costs and overhead. Plus the costs to support their app etc.
There’s been a couple of rapes with Uber drivers/riders. Has the company been sued yet for those?
This.
Uber.com provides absolutely everything except the seat for the passenger’s butt. Without the supporting framework, publicity, app, servers, and web of interconnection, the driver would be essentially useless. Few people could go around scaring up enough rides to be profitable as an independent.
They also handle all the financial transactions. This protects Uber drivers from robbery.
I assume they have to maintain some kind of insurance, they have a business, they probably have rent/mortgage (in a building with electricity and plumbing etc), they run commercials on TV, the owner takes a profit and all kinds of other expenses and they’re doing it all for 20%…that’s not too bad.
Also, keep in mind that unless they ding the drivers (like groupon), credit card transactions usually cost about 3%ish, so there’s that.