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Whats all the fuss with UBER!?

Uber’s model is potent in its simplicity. Passengers download the Uber smartphone app, which then gives them the chance to see aproximately how long it will take to arrive. Uber sets the fare and the passenger pays through the online platform. Uber takes around 25% and the driver keeps the rest. So, Uber doesn’t own cars and it doesn’t have employees as such. It contracts drivers who are happy to work on the basis of getting guaranteed fares, at least during periods of high demand.

The company uses the increasingly popular dynamic (or ‘surge’) pricing model, where the cost of a ride fluctuates according to supply and demand. Periods of high demand, such as Saturday nights, mean higher fares.

Like many other companies operating in the ‘sharing economy’, Uber says it isn’t a taxi company but a platform which facilitates an arrangement between a service provider and a customer (just like AirBnB).

This Guardian article tells the very interesting story of Uber’s ‘conquest’ of the London taxi market. Reading the comments made by Uber drivers gives you an insight into the mindset required for working in the ‘gig’ economy.

Drivers who work with Uber are classified as independent contractors, not employees, so they are not entitled to the minimum wage, paid vacations or health insurance. However, estimated earnings for Uber drivers do not account for costs incurred during the trip but only for Uber fees. Although it can be a tough and time-consuming way to make a good living, especially when supply outstrips demand, the upsides to this kind of model for drivers are that;

  • it can be an additional source of income

  • working hours are totally flexible - drivers decide how many hours they want to work

  • the payment procedure is very straightforward

  • surge pricing means if you are driving at a busy time, that shift can be lucrative


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