The taxi business of Uber has been growing in leaps and bounds over the past few years. However, for those who have been living in a cave and haven’t yet been on trips via an Uber ride or are not an Uber driver, Uber and its unique Uber app is like a taxi transportation company which allows drivers to transport customers using their own cars while collecting a fare based on the distance and time of the ride—and you can even use credit card! The Uber ride is a rather intuitive idea and it has shown to be successful in their massive profits and growth which have been increasing ever since they got started in 2009.
In order for Uber to grow from a small San Francisco-based company to a worldwide transportation firm that now serves over five hundred cities, it has had to make adjustments based on customer needs. One of the more newsworthy changes has occurred in just the past year or so and it deals with flat rate packages for riders in certain cities. This ambitious idea is specifically for riders in Boston, Chicago, Denver, Los Angeles, Las Vegas, Miami, New York City, Philadelphia, San Diego, San Francisco Bay Area, Seattle, and the District of Columbia. Though the program is still relatively new some customers have wondered if this flat rate is too good to be true. This is certainly an interesting question and one must really break down what is included in these flat rate packages and if you can save money by purchasing them. Here is a helpful breakdown of what the Uber flat rate is and if it’s beneficial to its customers.
Breaking It Down
In order to get a better idea of if this new flat rate policy is going to save customers money, it is first important to understand how it works. For customers using Uber and living in the cities mentioned above, they will now be able to purchase package deals of 20 or 40 rides for a flat rate. What I found on Uber’s website, which, by the way, is very streamlined and simply works great, was that when you choose this option it gives you the choice of twenty rides for an activation fee of ten dollars or forty rides for an activation fee of $20. These flat fare rides, however, are valid for 30 days or until you have reached your limit of 20 or 40 rides. This is rather interesting and may make customers wary of purchasing these packages because of the time limit imposed. Certainly, this is something that the customer will have to evaluate based on how often they use Uber and some will certainly find it well worth their while.
Ok, so you decide to purchase the 20-ride package for the $10 activation fee. This doesn’t mean you will get 20 rides for $10. When you purchase this package, Uber will explain that you are now locked in for those 20 rides at a flat rate that is in no way connected to the $10 activation fee you just paid. Instead, you are locked in at a flat fare of $2.49 for uberPOOL rides, which pair you with another rider who is going the same general direction as you, and $4.99 for UberX rides which are the typical rides from people who are working for Uber while driving their own car. These rates are for the San Francisco area, though they should be about the same for the other major cities.
Now, before you sign up for one of these packages thinking you will be able to take advantage of them by using Uber to drive you all over the country, there are limitations. The flat rates of $2.49 can only be used if the ride itself costs under $20. The same goes for the $4.99 rides, as they are only good for rides under $25. These limitations are certainly necessary, though it still brings up some serious financial questions as to how Uber is going to profit from these packaged flat rate deals while still being able to compensate their drivers appropriately. Also, rides to the airport in certain cities are not covered under these flat rate packages, but customers are able to get around this stipulation by getting dropped off at nearby train or bus stations that are near the airport.
For customers, though, this flat rate is a fairly good deal because even if you go over the limit for your ride you will only need to the play the difference and not for the whole ride. Customers have been testing out the viability of these flat rate package deals, and most have found that they can make up their $10 or $20 activation fee in just one of two rides. For example, going to the bus station from my house will typically cost $8, but using the flat rate package I only pay $5, saving me $3. Since I will be able to do this 19 more times in the next month, I will surely save a fair amount of money. This might be why Uber has set a limit on how many of these flat rate packages can be sold in a certain time period and many cities have already completely sold out.
Most experts agree that Uber is taking a leap of faith with these new packages. I say this because they are without a doubt going to lose money on the majority of the rides these packages provide. The only way they can make money on these deals is if the customer is unable to use all of their rides within the 30-day time frame. This is definitely a possibility and Uber can certainly make money if that happens a lot.
It’s a nifty idea and only time will tell if it’s a viable method for them as a business. As for the question of whether these flat rate packages are too good to be true, I’d have to say no for the time being because it’s the reality of what is happening and customers can take advantage of these packages as long as they are not sold out. As with any business, things will change and get tweaked over time, so get your rides in while you can.