Uber Tries Out a Subscription Billing Model

Source: Wikimedia For some time now, Uber's approach to the marketplaces in which it operates has been straightforward. By using its innovative app, you can order food, a taxi, a ride in a private car shared with other passengers and even secure the use of bicycles. Since Uber first got going a decade ago, we have got used to the ability to order all manner of things from our smart devices, from accessing an online casino in our hands to ordering goods to be delivered to your front door with just a tap or two. As such, it is sometimes easy to forget just how innovative Uber – and the world of e-commerce more generally – has been. When you secure any of the services Uber offers, a fee is charged, usually to your linked PayPal account or your credit card. In this regard, Uber has always been a kind of pay-as-you-go service with both the service provider and the customer being paid according to the service that has been delivered. However, the peer-to-peer technology company is now trialling a different commercial model that will put it more on the same footing as Amazon. Like Amazon, it will still be possible for Uber's customers to continue only paying for the services they order when they want them. However, in some cities, it will now also be possible to pay a monthly fee rather like Amazon Prime. What is Uber up to?

Uber's Ride Pass

Uber first introduced its Ride Pass subscription service in 2018. Under a Ride Pass, Uber customers have to fork out a monthly fee on top of the charges they pay for the services they procure for taxis. However, the point is that they are then able to obtain discounted rates. This means that the Ride Pass generates an additional income stream for Uber and works in their favour so long as the customers who subscribe to it don't earn more back in discounts every month than they spend on subscriptions. What the Ride Pass proved to the powers that be at the company is that it did make economic sense for them to roll out into other areas of the business. Simply put, subscribers were encouraged to spend more of their money on Uber taxis rather than competitor services. Even if Uber loses out a little here and there, the company was still winning because competitors were losing out and subscription fees can always rise in future. Source: Wikimedia

The Expansion of Ride Pass

In March, Uber said that it would expand its Ride Pass to include other services it offers, such as UberX, Uber Pool and Express Pool rides. Crucially, the service will also now include electric bike hire and scooter trips. According to Uber, the discounted rates on offer will be based on the historic data of customers in the cities where it will be trialled. Uber reckons that it could save their customers up to 15 per cent on their travel expenditure over the course of an average month. Time will tell whether or not this estimation turns out to be the case, of course. Los Angeles in California, Austin in Texas, Denver in Colorado as well as Orlando and Miami in Florida were chosen by Uber as the first five cities to trial the expanded version of its Ride Pass service. The system has now been made available in New York City, Dallas, San Diego, Seattle, San Antonio, Las Vegas, Phoenix, Orange County, Baltimore, New Orleans, Nashville, Portland, Raleigh-Durham, Saint Louis, Jacksonville and Memphis, too – all cities in the United States. Further expansion to cities Uber operates in outside of North America is also in the pipeline but has not yet been finalised. Uber says that one of the key advantages of paying its subscription fee is that prices are not just discounted but locked in. Anyone who has used Uber will know that prices fluctuate on its app-based service, just as it would on any marketplace. As such, external criteria such as the weather, levels of traffic, or simple upturns in demand for services can push pricing up. So-called surge pricing is done away with for subscribers although Uber may introduce other mechanisms for charging more down the line if it changes its terms and conditions. That said, there is no limit to the number of rides subscribers can take each month with the discounted fees so it certainly makes sense if you know you will be using Uber more than usual in the course of the next few months.

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