Are you looking for an affordable way to get from A to B? While public transportation is generally cheap, it is not always very convenient. If you don’t happen to live close to a bus stop or train station, you may need to look for another option.
When it was first introduced, ridesharing promised to provide the perfect solution. However, you may have noticed that the cost of ridesharing has been on the rise recently. So, if you have been wondering, ‘why is Uber so expensive?’, then it’s time to find out…
- Uber Prices
- Factors that Affect the Increase in the Cost
- Alternatives to Uber
- Want to learn more about Uber?
- Why is Uber So Expensive? – Final Thoughts
Uber revolutionized the taxi industry when the company was launched in 2009. Part of the appeal of the app was that it promised to be cheaper than taking a traditional taxi. Let’s take a closer look at the cost of this service.
The impact of COVID-19
When the COVID-19 pandemic hit in 2020, many people were forced to start working from home. As a result, the number of people commuting to work and traveling in general reduced considerably. This meant that the demand for rideshares decreased virtually overnight. Because fewer drivers were needed, many people decided to quit and search for other types of work.
While demand for rideshares has not increased, the number of available drivers has not risen to meet it. Many former drivers have decided against returning to work and have found another type of work they prefer to stick with.
As a result, Uber is now suffering from a labor shortage. This is a common issue among a large number of companies in the United States. In order to keep the existing drivers, the company has been forced to pay them a higher rate.
In the past, this service was a popular way for people to save money on transportation. Multiple people could choose to share rides to cut the cost, especially during work commutes. However, since the COVID-19 pandemic, a large number of people are unwilling to share rides with strangers. As a result, this service is currently unavailable.
These days, many people report that the cost of a ride to the airport costs more than their flight. In addition, the wait times for rides have become much longer. However, the cost of rides was starting to become higher even before the COVID-19 pandemic.
Factors that Affect the Increase in the Cost
It has been widely reported that the cost of rideshares are around 40% higher compared to a couple of years ago. While driver shortages account for some of the price increase, there are other reasons for it. Let’s take a closer look at some of the main factors that have caused prices to soar.
The cost of getting a rideshare in certain cities can be much higher. The most expensive cities to use the service include Colorado Springs, New York City, The Hamptons, and Pittsburgh. Some airports charge drivers a fee to drop off and pick up passengers, which results in a higher rideshare rate.
The company tends to charge more for rides when demand is higher. This includes during rush hour, special events, and bad weather. People who choose to get a rideshare during these times will have to pay more for their journey.
The shortage of drivers means that they can now command a higher salary. The company is being forced to pay drivers a higher rate to prevent them from quitting. Drivers are also offered special promotions and incentives to encourage them to work more. These additional costs are passed onto passengers, resulting in higher fares.
The Cost of Gas
Gas prices have risen considerably in recent years for a number of different reasons. This is one of the highest costs involved with any type of professional transportation. As prices of gas rise, rideshare rates are forced to meet them.
Like most large corporations, Uber spends billions of dollars on marketing each year. The company typically spends around 28% of its total revenue on marketing and sales. In 2018, this amounted to a staggering $3.2 billion.
Even though the company is fairly well-known, it is important to advertise new services and features. Marketing becomes even more important when demand from customers starts to drop. In many cases, it is necessary to raise overall prices slightly to cover the costs of marketing and other promotions.
All drivers who work for the company are provided with a certain level of insurance free of charge. This insurance mainly covers drivers when they are picking up and dropping off passengers. The more drivers who work for the company, the higher the company’s insurance costs will be. The best way to offset this cost is by slightly raising the cost of each ride.
Most companies offer a rewards program to attract customers and help encourage customer loyalty. These rewards programs allow customers to earn points each time they use the service. These points can then be traded in for special rewards such as discounted services.
Unfortunately, Uber does not offer a rewards program. In fact, you may end up paying more for rides during certain times of the day. Getting caught with surge pricing due to a lack of planning can really eat a hole in your budget.
Monthly Membership Plan
However, it is possible to save money by opting for a monthly membership plan. You can purchase an Uber Pass for a monthly fee of $24.99. This allows you to save money on rides and orders through Uber Eats.
Paying for a membership can save you between 10% and 15% on each ride. As an added bonus, you will not be subjected to surge pricing when you have a membership. However, membership is not available in all parts of the United States, and California residents are excluded. The cost of membership may only be worthwhile if you usually spend a lot on this service.
Alternatives to Uber
These days, rideshares are not as cost-effective as they used to be. In some cases, the cost of a ride can be higher than the cost of taking a traditional taxi. So, here are some great ways of saving money on transportation if you are on a tight budget.
This is, without a doubt, the easiest way to save money on transportation. Not only is walking completely free, but it will also help you to get fit. However, you need to take the extra travel time into account. Walking during bad weather can also be unpleasant, and it may not be safe in certain areas late at night.
This is another great way to save money while getting fit at the same time. If you are new to cycling, it is best to take a basic bicycle maintenance and road safety course. However, like walking, cycling can be unpleasant in bad weather and late at night.
This option is becoming increasingly popular among people who follow the same routes. You can find work buddies who live in your area and take turns driving to work. Carpooling with other parents is also a good way to take the kids to and from school.
However, it is important to choose your carpooling buddies carefully. Some people are not reliable and could make you late for work if they oversleep. While some people are happy to let you drive, they may be reluctant to return the favor. It can also be tricky to find people who have the same schedule and follow the same routes.
Taking the bus
It could be worth finding out if you live close to a bus route. This is a good way of saving money on longer journeys such as trips to the airport. However, you are still likely to have to cover part of your journey on foot.
Riding the subway
If you live in a big city, riding the subway can be a quick, convenient, and cheap way to get around. These days, many people who turned their back on the subway are returning to this form of transportation. There are often special deals at certain times of the day to encourage people to use the service.
However, subway cars can get quite crowded, especially during commute times. Trying to squeeze into an overcrowded car can be stressful for some people. The increased demand can also lead to delays, which could make you late for work.
Want to learn more about Uber?
For an overview of the company, it’s worth checking out our in-depth Uber Mission and Vision Statement Analysis for 2023.
Or, if you’re thinking of easing the driver shortage by working for the company, take a look at our guide to the Uber Application or the Uber Eats Application. It’s also worth finding out Can A Felon Drive For Uber before you apply if you happen to have a criminal record.
Why is Uber So Expensive? – Final Thoughts
Not only was Uber the world’s first rideshare app, but it also remains the most popular. The app is available for use in around 10,000 cities in more than seventy countries. Around 93 million people around the world use the app at least once a month.
However, the number of active customers has decreased by around 10% over the last couple of years. This is at least partly because the COVID-19 pandemic caused rideshare prices to rise. While it is hoped that rideshare costs will be reduced in the future, it is uncertain how and when this will happen.
Happy and safe travels, wherever and however you decide to go!