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This Is How Uber Spends The Money You Pay For Rides

| Published on January 14, 2018

The cab industry has seen a immense growth in past few years. Companies such as Uber and Ola have become a part of modern life. Every day millions of people use the cab services as a mode of transport. Uber collected around $9.7 billion( Rs. 63,000 crores) in the third quarter of 2017 from their rides. Have you ever thought about how the money you spend on these rides gets distributed? Well, we have an answer to that. Below is the complete explanation of how Uber uses the money we pay for rides:

Source

Suppose you have paid Rs 100 for an Uber ride. Now, let us have a look at what expenses Uber pays for running their business.

Driver cost

Out of these 100, Rs. 68.12 are paid to the driver and the company uses the remaining income for many purposes.

Incentives

Along with getting money for rides, some lucky drivers and employees also get incentives from the company. Uber keeps a share of Rs. 3.99 for every 100 rupees you pay.

Offers and Discounts

Uber attracts customers by providing amazing offers and discounts. These discounts have a value of Rs. 4.65 out of 100.

Refunds for rides

A lot of times Uber has to pay refunds to their customers. These refunds cost around 20 paise per ride.

Taxes

Different countries have different tax rates for Uber but on an average, the company cuts Rs. 3.34 from a 100 rupee ride.

Insurances

Although Uber doesn’t own their cars but it spends a big share of its money for paying insurances. Uber pays Rs. 10.56 for a Rs. 100 ride.

Marketing and promotions

Being one of the most successful cab companies in the world, Uber spends big money on both online and offline promotions which costs them Rs 5.89.

Research and Development department

For managing such a large business the company spends Rs. 3.23 on the research and development department.

Administrative tasks

Uber roughly spends about Rs. 3.86 on the administrative tasks such as renting offices and legal expenses.

Providing support to users

For operating the company in more than 500 cities around the world Uber pays Rs. 3.81 for a ride that costs you Rs. 100.

If you calculate all the above expenses you can see that the total cost comes to be Rs 107.65 so Uber is working at a loss of Rs 7.65 for every 100 rupees we pay for its rides. That is the main reason why company was having a annual lose of Rs 18,150 crore in 2017.

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