Close Close Search

Best Tips to help you understand how Uber Business Model Works

Last updated: July 29, 2020

With the wake of the digital revolution, technology is becoming a norm in our daily lives, and especially for businesses seeking to grow. Uber has grabbed that opportunity head-on and has created a platform that connects passengers with taxi drivers who have their own cars.

Being one of the leading transport service providers, it has created a wide range of services like the UberPOOL, UberBLACK, and UberX, to name a few. It is cheap and also a convenient way of commuting. For you to be a customer, you have to install the Uber mobile app on your smartphone.

So, who are Uber’s target customers?

  • Those who want to be picked at their doorstep
  • People going out for parties
  • Those that don’t own a car
  • People who can’t drive

???? How Uber works

Uber works for drivers and passengers and has created a platform where both parties can get in touch with each other. Below is an overview of how the platform works in general.

 I.   For the passenger;

As an Uber passenger, you will be required to fill your profile with details on your contacts, your email address, and your debit or credit card details on the Uber app. Once you are registered, you can call a taxi through the app. The passenger is also able to track the location of the uber through the app.

What an Uber customer enjoys

  • Affordable prices as Uber charges less than normal taxi’s do.
  • Quick pick up. You do not have to wait for long.
  • You do not have to worry that your fare will increase halfway the journey. Uber prices are fixed for certain locations.

II.   For the taxi driver;

A driver must have a valid driving license. He/she will be required to fill details on tax verifications and administrator approval. After approval, the driver is fitted into the system and is given an Uber iPhone.

What an uber taxi driver enjoys

  • One can pursue other jobs on the side.
  • A driver can choose when to work. Either part-time or full time.
  • It is a good income source.
  • A driver can still be paid even if they don’t get any rides

III.   Payments

The amount a passenger pays solely depends on the type of car they want, peak time, and the distance that will be covered. Uber sets the amount of fare to be paid and cash payment options.

Passengers do not necessarily have to pay through cash but credit cards, which is a more secure payment option.

  1. Profit-sharing

Uber shares their profits with the driver, taking 80% of it and the 20% going to the uber.

  1. Future of Uber

With the growing demand for quick pick-ups, Uber is set to expand its boundaries to more cities.

Also, since Uber does not own any taxis, its profit margins are obviously higher, thus creating vast opportunities on its side.

Uber is dedicated to investing in electric vehicles and future methods of sharing a vehicle.

⛓️Ubers connection model

Here, I am giving an overview of how passengers and the drivers connect step by step.

Step 1: Taxi request

An uber user requests for a taxi via the Uber app and the app puts a taxi for pick up.

Step 2: Matching

Having placed the request, the app connects to a driver nearest to the pick station with details of the pickup. If a driver rejects an offer, the app passes it to some other driver nearest the location.

Step 3: Ride

The driver picks the passenger, and the ride starts. The app calculates the price as you move.

Step 4: Payments and rating

At the end of the ride, uber notifies the driver and the passenger on the fare to be paid. The customer then pays the amount per their payment preference.

The driver and the passenger can then give each other ratings on the drive experience. The app allows for drivers to be tipped too.

???? What makes Uber stand out in the business and revenue model?

The high demand for rides has helped Uber to be ranked the highest value private technology company. It has set lanes, and this is due to some of the companies’ strength strategies. They include:

I. Effective pricing

Pricing Strategy for Uber works on the demand and supply principle. The higher the demand for Uber, the higher the fare price.

The fare also rises during the peak hours and during the bad weather.

II. Brand equity

Uber is valued at $91 billion, and investors are partnering with uber due to its strong brand valuation.

III. Growth rate

Uber demand has led to its growth in the transportation sector. In 2014, Uber had a gross revenue collection of $2.93 billion that kept going a notch higher. By 2016, Uber had revenue of $20 billion.

IV. Customer satisfaction

Uber’s wide range of vehicles ensures that every customer is served the way they want. Its initial operations were taxi services, and they have grown to give a wide range of them. Some of them include:

  • UberXL- carries up to 6 people.
  • Uber SUV- specifically for SUVs
  • UberBlack- only black luxury vehicles
  • UberWAV- for physically disabled with access to wheelchairs.
  • Uber JUMP- For hiring electric bikes
  • UberPool- travel option for 4 or more passengers heading to the same direction

Other than helping people commute, Uber also provides other services like: –

  • Uber Freight- it was launched in 2017 and offers shipping services
  • UberEats- for food delivery
  • UberAir- set to be launched in 2023, it will allow for air transportation from a city to another.


Uber is a growing business model mostly because people are looking for better and more comfortable ways to commute. Its top-notch services allow for future growth and demand for its services.

View All Comments (0) Add A Comment