Uber. How i play it. Part 1

Are you interested in Part 2 ?

  • Yes

    Votes: 12 75.0%
  • No

    Votes: 3 18.8%
  • Neutral

    Votes: 1 6.3%

  • Total voters
    16

schweepers

New Member
First of all, sorry if there`s some grammatical error in this post as i simply typing it out without editing.

Part 1 : Understanding Uber from their point of view
Summary : Uber are recruiting drivers and paying them incentives. They need to do so if not the model will not work out. Before Uber gained the a substantial share of the market, as Uber drivers we can take the full advantage out of it. Full advantage = work less, earn more.

My background story : I rented a car and during my first week with Uber, I was slogging hard and driving many hours a day and in the end, I earned a NET total of $300 and change. 7 days a week, 8-9hours a day. Factoring in the cost of my meal and drinks, we are looking at around $250net which also translates into approximately $4.50/hour on the road.

My approach : I sat down and thought about it and this cannot go on. I had a change in strategy for the past 2 weeks and it triples my net income and I worked almost 30% less per week. The figures are $650-700net working about 6hours a day. That`s almost $2800net income. Take note, it`s 7 days a week, 43hours clocked. If this sounds good to you..read further..


Understanding how Uber works : Everybody knows how Uber works for a rider(passenger)so I`ll skip that part. Let`s talk about how Uber works for a driver. We shall break this discussion into 3 parts.

1. What is Uber trying to do now ?

Summary : Uber is trying to gain market share.

Detail : As mentioned, i realized that Uber is trying to gain market share in Singapore and the incentives are pretty decent. For those who don`t know how Uber works for riders (passengers), the cost of the ride is simply determined by supply and demand. For example, if there are 10 people requesting for Uber in Jurong point and there are only 2 drivers in that area, there will be SURGE in price in that area. In layman`s term, SURGE simply refers to extra charges to be paid by the passengers. These extra charges range between 1.2x the original fare to 4x, again, it depends on supply and demand. The more the trip request, the less the driver, the more the surge. It`s simple.

For Uber to break into any market, there must be a large supply of drivers on the road because people are not willing to pay extra. However, once there is a large supply of drivers on the road, the supply will be high and by then, either there will be no surge or the surge will be kept low enough to attract passengers to take Uber instead of taxi.

Solution ? Attract more drivers because if there are more drivers, more people will take Uber because it is cheaper than taxi. More people to take Uber means the more Uber will profit. FYI, Uber will take 20% commission for the gross income made by the driver.


From consumer point of view, this is highly attractive. Cheap and quality transport.

What about the drivers ? If there is little surge or extra charges and the price of the trip is low AND Uber still take 20% out of it, what exactly do Uber drivers earn? We have yet to reach that stage yet, so I shall not discuss about it. What is happening now is Uber is trying to get more drivers on the road and it is possible to take good advantage of it.


2. Why is Uber giving out free money and huge incentives especially for drivers ?

There are 2 reasons for that.

Reason 1 : They are trying to attract more drivers to increase the supply so that riders will pay less compared to taking a taxi.



Reason 2 : As Uber is trying to gain market share, Uber price is yet to be competitive compared to Grab and Taxi. The only edge that Uber has is the convenience that Uber picks u up at your doorstep. Then again, Grab is doing the same. There are still not enough riders to tip the situation in favour to Uber. Right now, there are not enough riders to put Uber in an ideal scenario because sometimes riders are still paying more. Why do they pay more at times? Because there is not enough drivers! But wait! If there are not enough riders choosing Uber consistently, then why would I join Uber as a driver ? Theres more..if there is not enough drivers, that means riders will have to pay more for the surge because there is a lack of supply. Do riders want to pay more ? NO. Then, they will stop using Uber. To sum it up, they need a lot of DRIVERS. For those who are still confused, I am going break it down for you

Rider: drivER and Uber - Eh I don't want to pay surge ah, If can I wanna pay no surge rate
Driver: Rider - But Uber rate is cheaper than taxi leh, if I just pick up you without the surge, I might as well go driver taxi. At least taxi still got other charge like mid night.
Uber: Eh Driver tolong la, you don't go drive taxi, if you all go drive taxi than I will have less drivers. Less drivers mean riders have to pay when there is a lack of supply on my side.
Driver : UBER – You no customer your problem la. Not many customer u still want me to come and drive for you then I earn what ? your uber rate some more so cheap, still take 20%, then I earn what sia ?
Uber : *THINKING to self* Jialat la, rider want cheap, driver want earn. Now the problem is driver kp say drive 1 day 8hour earn peanuts because my fare too low. But wao lao, is fare low then people will take uber ma! Once my drivers all slowly quit, lack of supply means then my uber surge sure go up then by the time is riders kp say my fee too ex, don't take my uber already. Ok nvm, I lose abit of money first.

Uber : Eh Driver! If u work for me, even if u no pick up rider I still give you money. You say u work 8 hours earn peanuts right ? nvm ,u drive for me I give u incentives. I give you hourly guarantee. 1hour $35 ok bo ?

Driver : 1hr $35 ?! Sure bo ? Ok I drive, I intro my friends also.

Some time later….

I predict that these incentives will be taken away once there are enough drivers and riders. Drivers will have to work longer hours because the waiting time is shorter and there are enough riders on the road to pay the drivers a decent income. In other words..exactly like a taxi driver. Uber no longer need to give out incentives or hourly guarantee because the money is out there for you to grab.



3. What is the desired scenario for Uber ?

Let`s take a minute to analyze an ideal scenario for the Uber market.

1. Riders want to pay less
2. Drivers want to earn more
3. Uber wants to profit more

At first glance, this ideal scenario does not make a lot of sense because how is it possible that by paying less (riders), drivers and Uber earn/profit more ? However, this is possible when there is enough volume. If there are a lot riders,



Part 2 to be contiuned will be exploring these areas..

1. Increasing my net hourly by driving less and earning more.
2. Taking breaks and earning money
3. Appreciation and good will
 

renyeo

Well-Known Member
Moderator
I like: "Work Less, Earn More".

From time to time I would hear riders lament their difficulties in getting an Uber car during the AM peak window period. (And if they got a Grab car, the drivers would cancel on them everytime. Sounds familiar? Yea, ex-cabbies, ha ha!)

So when Uber are still dangling incentives go out and grab them.

And when they cut everything eventually, you could look back and say: "it was fun while it lasted." I'd hate to see myself giving up every thing learnt on the Uber platform but then if no enough money, then no talk liao (work less, earn more, not > work more, earn little. HORROR).

Just Uber on for now, lah!

:wink:
 
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powerpoint

Active Member
to be honest. there are secrets, but an open secret if anyone think hard enough how to work smart and understand what you do and get about to how you do it.

if you gonna list it all down, uber is gonna plug that gap sooner than t later. that as if they dont know about it, but there are still suckers and dumb ass who dont think on their feet.

that been said, knowing the secrets or the know-how to work smart will still need discipline and hard work to make enough money. and enough is a relative term.
 

renyeo

Well-Known Member
Moderator
Singaporeans are attracted to Grab-Uber because of the pull of empowerment.

What empowerment? The mobility that a car provides, that is. The lure is too strong to ignore. To this group of drivers earning an income on GU is not the main force of intent but a platform to earn supplementary cash to offset the rentals. Remember the plan is to have a car whether it's beg, borrow, steal or drive for Uber.

Never mind they excel in poor navigation or has little interest in roadcraft or customer service, the drive in them is keeping the car.

When was the last time COE premiums were at $10k? And banks were offering auto loans for $0 down and 10 years instalments? Ha ha!
 
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renyeo

Well-Known Member
Moderator
To be honest I not believe unless he gets incentives everyday.

Actually from the beginning I have suspected that piece of thing is an advertisement.
Does this also means he (assuming TS works for Uber) has just leaked the news that Uber plans to remove all incentives once there are sufficient supply of drivers? Ha ha!
 
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Observingonly

Well-Known Member
Exactly. Just to prepare the drivers what is going to happen. Also to test the responses.

I wil also do this if I am sitting there with the proper authority.

There are another few guys here too. But I take it as just normal of what any co will do if the management is not sleeping and dreaming in their offices.

Don't forget that there are people who were deceived into this job as had been discussed many times in this forum.
 

Observingonly

Well-Known Member
Agreed.

Both taxis and Uber have conditions which, limit their earnings. Uber does have one advantage, low rental, over taxis. But this is easily offset by the 20% commission.

Other than that, in terms of fare, surcharges, booking fees, street pickups, tips, it is all inferior or nil compared to taxis.

So it is just logic and not prejudice that I agree.
 

renyeo

Well-Known Member
Moderator
Agreed.

Both taxis and Uber have conditions which, limit their earnings. Uber does have one advantage, low rental, over taxis. But this is easily offset by the 20% commission.

Other than that, in terms of fare, surcharges, booking fees, street pickups, tips, it is all inferior or nil compared to taxis.

So it is just logic and not prejudice that I agree.
May I add: besides the 20% fees, Uber's fares are uneconomically cheap which in long run only serve the interests of riders and no one else.

When things are too cheap the real costs are high.

See if Uber wants to fulfill 80% (a hypothetical figure for the purpose of this discussion) of all bookings that come in during peak window periods it has to flood the roads with a lot of drivers. Economists however has a term for the phenomenon and it's called "point of diminishing returns". This phenomena happens when Uber introduce cut-rate fares to attract riders and use incentives to regulate supply of drivers at will. Drivers stop driving once they consistently fail to qualify for incentives (or when incentives are cut or removed) because there are too many drivers. While there are no lack of riders fares are too cheap to make upfor any meaningful income for the drivers. So more drivers dropout of the system. At the end of the day Uber is still unable to fulfill the 80% target it needs.

If Comfort and co haven't succeeded in decades to meet peak hour demands I wonder how in the world could Uber do it and do it efficiently.

Keeping my eyes peeled.

:wink:
 
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Observingonly

Well-Known Member
In order that this becomes a sustainable career, the supply and demand must reach a state of equilibrium by itself. That means riders and drivers are both happy about the services and how much they cost. If there is continuous intervention of the state of supply vs demand such as incentives / fare / introduction adjustment by Uber there is no way that equilibrium can be reached by itself.
 

renyeo

Well-Known Member
Moderator
In order that this becomes a sustainable career, the supply and demand must reach a state of equilibrium by itself. That means riders and drivers are both happy about the services and how much they cost. If there is continuous intervention of the state of supply vs demand such as incentives / fare / introduction adjustment by Uber there is no way that equilibrium can be reached by itself.
Just thinking aloud: when people are still using taxis (cabbies only saw 20% drop in business following Grab-Uber entry) even as they are prohibitedly expensive with woeful customer experience, why is Uber chasing the bottom end of the market with uber-cheap fares? If so how long before it will raise its fares to match taxis' price points?

With current fares minus all incentives it's fair to say earnings (nett after expenses) are sufficient to part-offset (if not all) LCR rentals by driving 5 hours a day 7 days a week. Is this the group of part-timers Uber is chasing? Does this argument also explains why most of them in this forum didn't actually understand the workings of incentives and TPH because they drive mainly for the fares not incentives?
 
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Observingonly

Well-Known Member
All along taxi drivers (omo type) are able to cover their costs (rental & fuel) after 8 hours of driving. The earnings after that are nett income. It is very tough job but even today this is more or less the same. But because Uber's fare is set below taxis' and there s commission to pay, even if the drivers can cover their costs after 8 hours of driving, the nett earning after that 8 hours will be lower than taxi drivers. This is assuming that the drivers didn't get the incentives of course.

I believe that even in the long run Uber is able to increase its fare, the increase would not be significant. This is because it would not want to go higher than taxis' basic fare in order to keep it's market share. But taxi fare actually consists of a few other parts like booking fees, surcharges, etc, etc. The real and sustainable fare is actually the peak hour fare of +25% meaning that only with that taxi drivers can earn decent enough to feed their families. And the so-called basic fare after the peak hours is to help people who have small budgets but need to take taxis for one reasons or another. It is also meant for the drivers to earn some money when the working people are already at their work places working.

But Uber being an American co will not do the same ( because these red hairs don't understand our situation) at least not until they realize that +25% on the basic fare should be a normal fare (considering the cost of living here) and not treating it only in the form of surge or incentives of which only some drivers can get.
 

Observingonly

Well-Known Member
Just to add on to my point of equilibrium : That is exactly why taxis are not overly affected by Uber and Grab. Taxis adjust fast, because taxi companies don't change the rules everyday. Drivers who don't feel that their effort and time are compensated adequately will leave, so supply and demand get rebalanced. It is the taxi co's who suffer most!

Uber is different. It wants it's drivers to deploy everywhere in Singapore. So the more drivers the better. It doesn't have to pay for their cars anyway. And hence you find surge here and surge there and when you are there, you get nothing.
 
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