Uber Technologies Inc. was founded in March 2009 as a peer-to-peer sharing company. The organization focuses on providing taxi services, ridesharing, food delivery, and transportation network supports from their San Francisco, CA headquarters. The organization is currently operating in more than 630 cities around the world. Services were first launched by the company in 2012.
The influence that this company has had on urban transportation access has even caused the company name to be used as an action (i.e. “I’m going to call an Uber.”)
There are several levels of service available through Uber, though not every service is available in every region. From black luxury vehicles to pet transport to wheelchair accessibility, the goal is to provide every potential customer with the type of transportation they require to meet their needs.
In 2017, revenues for the company rose to $7.5 billion. Net income, however, was a negative $4.5 billion. More than 12,000 people are currently employed by the company.
Here are the core pros and cons of Uber to consider.
List of the Pros of Uber
1. Ratings help to form the basis of relationships.
Drivers are under a lot of pressure to offer outstanding services to their customers. That is because a minimum required customer rating of 4.6 out of 5 is required. Each passenger gets the opportunity to rate their driver on each trip taken. Although each city sets a minimum standard for driver conduct, once a driver falls below that rating level, they are deactivated as a driver. Drivers are able to rate their passengers as well, with a minimum rating required to use the service as a passenger as well.
2. Different service tiers are available.
Uber is able to cater to passenger needs in almost every city, in almost every way. Most people are familiar with the service known as UberX, which is a regular consumer car, offering space for up to 4 riders. Fares for UberX are charged at rates that are similar to a standard taxi service in each city. Some services accommodate kids with booster seats available, while UberXL allows for SUVs or minivans to provide services.
3. Model year minimums apply to Uber services.
Uber does not allow some vehicles to be used for transportation services. The vehicle must be a 2001 model or newer, with some cities requiring a 2010 model for vehicles in the 2018 service year. The vehicle must have four doors, drivers must be 21 or 23 years of age, and insurance which covers the services being offered must be on the vehicle. All drivers are required to have a clean driving record. Full-size vans, marked vehicles, salvaged vehicles, and Crown Victoria models are prohibited under the current guidelines offered by the company.
4. It is very easy to contract a vehicle to use through Uber.
To use Uber, just install the company’s app on your mobile device. You’ll need to create a company account, which includes attaching a credit card for charging. Tell the app where your pickup location happens to be when you require a ride. Then Uber will tell you how long your wait will be. For most locations, a ride can be located in 10 minutes or less. Payments are handled electronically, no tips are required, and you are given the full details of who your driver is and what vehicle they drive.
5. You can split the fare with Uber.
If you are sharing a vehicle with a group of others, then you can schedule your ride with an equal percentage share of the vehicle cost. That makes it easier to divide costs. It also reduces the time it takes to figure out cash payments, limits personal contact with the driver, and creates a simple and convenient method of ensuring you get to where you need to be.
6. Uber is a very affordable service.
In most cities, hiring a ride through Uber can be at least 25% cheaper than hiring a taxi for the same service. Some locations can offer riders a savings of more than 50% when compared to a taxi. At the same time, the vehicles used by Uber tend to be newer, cleaner, and smell better than the vehicles which are used as a full-time taxi. These rates are possible because of the cashless systems used. Because the overhead costs are much lower, customers pay much less, which gives the company a distinctive advantage in its markets.
7. Drivers are not forced to pay service costs for their vehicle.
In many large cities, taxi drivers are forced to pay more than $1,000 per month, to their company and the city, for various administrative or dispatch services. Taxi companies often have the option to levy certain fees on their drivers at their discretion as well. Uber does not charge a monthly fee to its drivers, which makes it possible for amateur drivers to earn some cash with this company as a side hustle. There may be a minimum requirement of 3 years’ driving experience enforced, which is why a minimum age requirement is in place.
8. Safety is improved for drivers in the Uber structure.
Drivers do not need to carry large sums of cash to make change for their riders because Uber is cashless. That, by itself, improves the safety of each driver. Uber allows drivers to set their own hours as well, giving them the option to log onto or out of the system at their discretion. Many drivers can also avoid rental leases, which can create more profits. Even the dispatch system is based on automation instead of internal office politics. That creates a system where drivers can create a positive riding experience to maximize their profits.
9. Uber increases the supply of available vehicles in each city.
What makes Uber, and all ridesharing companies, such an advantageous opportunity is that it increases the number of available vehicles which riders can access. That means there are more choices for riders to enjoy. They’re not stuck with whatever taxi decides to show up after they order a ride. Uber also eliminates the need to try to hail a taxi when a ride is needed, which improves the experience for riders and drivers. This system also makes it possible to supply cars to outer neighborhoods where taxis may not wish to go.
List of the Cons of Uber
1. There is a dispute on how to classify drivers for Uber.
When Uber was first formed and began to offer services, the drivers for the company were treated as independent contractors. Because drivers must follow specific rules and meet obligations to maintain their employment, however, a judge in California ruled in 2015 that Uber drivers were employees, not contractors. That has led to a movement in some cities to unionize drivers against rules from the company which they perceive to be unfair. Not every city is experiencing this dispute, though it does lead to a level of uncertainty for some riders.
2. It takes time to become an Uber driver.
Although it is easier to become an Uber driver compared to driving for a taxi company, there are still some time restrictions which must be considered. Your vehicle must qualify for you to become a driver. Once your vehicle qualifies, your insurance policy must also qualify. Drivers must be able to confirm a clean criminal record, a clean driving record, and pay for an upfront vehicle inspection fee. It generally takes about 2 weeks to become an Uber driver, though in some cities, that time frame can be reduced.
3. Uber charges surge pricing and primetime pricing.
Uber operates on a supply-and-demand principle. When there are more riders looking for transportation services, then the company charges more for the same ride. For people who only have transportation needs during primetime or surge pricing, the potential savings experienced by using Uber begins to evaporate quickly. Some riders may find that hiring a traditional taxi for short rides is cheaper, even if the wait times are a little longer.
4. Drivers sometimes try to game the system for bigger profits.
Uber is no different than any other taxi service or driving company when it comes to the quality of driver received. There will always be some drivers who try to earn more money by taking a longer route to get to an intended destination. There may be times of slow driving, or complete stops, when it may not be necessary to do so. The ratings system is intended to weed out these poor drivers from the system, but with its policy of open employment, there will always be a few drivers who slip through the cracks.
5. It functions off of an automated system.
Uber uses automated systems and algorithms to decide which driver to send your way or how much the trip is going to cost. That can sometimes get the company into trouble, as the system may see a surge in calls and raise prices dramatically in an emergency situation. The company has taken steps to reduce this type of incident from occurring. No system is perfect, however, and there is always the possibility of being accidentally overcharged for a system error which occurs.
6. Customers may find themselves spending more than they normally would.
Uber is cheap and convenient in most cities. Because that is the case, many residents have found themselves hiring a car to take them short distances in the city when they would normally have walked to their destination.
That creates two distinctive disadvantages which must be considered. Riders receive less exercise than they normally would because of the convenience of having a vehicle arrive. Then there are fare minimums to consider. UberX, for example, has a minimum fare of $5.60 and a booking fee of $2.10 in Los Angeles. There is also a $0.15 cost per minute, plus $0.90 per mile.
7. Drivers bear the brunt of the costs when working for Uber.
Drivers used to use surge fares as a way to counter the lower fares that Uber offers. Now that more drivers are becoming active within the company, the average wages for drivers are slowly decreasing instead of improving. That has forced drivers to be behind the wheel for longer time periods to earn the income they need, which creates safety issues on the road. At the same time, Uber wants late-model vehicles, yet reserves the right to deactivate drivers for low ratings, which puts all the risk onto the driver in this relationship.
8. Uber is not available in all locations.
Although Uber is available in many cities around the world, it is not available everywhere. Many rural communities do not have access to the various benefits Uber offers to riders in larger cities.
The pros and cons of Uber show how consumers benefit when a company is willing to be innovative and disruptive simultaneously. More people have access to employment opportunities because of Uber. Riders have more vehicle options, lower wait times, and lower costs when compared to traditional taxi services. These benefits, however, can also turn into disadvantages in some cities, especially if surge pricing rates are involved.
Blog Post Author Credentials
Louise Gaille is the author of this post. She received her B.A. in Economics from the University of Washington. In addition to being a seasoned writer, Louise has almost a decade of experience in Banking and Finance. If you have any suggestions on how to make this post better, then go here to contact our team.