Starting tomorrow, Uber is bringing a “have-it-your-way” option to San Francisco and New York customers.
Or more precisely, a “have it one of three ways:” Economy, Standard, and SUV. Uber’s blog boasts the new choices, but even the cheapest option is still more expensive, anywhere from 10 to 25 percent, than a non-Uber taxi. So why the ever-increasing demand?
Uber will point to its premium perks, namely luxurious cars that are trackable and arrive on-time and pre-paid, but it’s that pre-payment, approved in one quick click, which gives Uber both its greatest advantage and potential long-term challenge.
Braintree enables Uber, Hotel Tonight, LivingSocial and other mobile apps to offer a frictionless payment experience, the holy grail of mobile e-commerce. CEO Bill Ready estimates that about 90 percent of customers who pay through its enabled apps opt in to automatic credit card deductions. Ready credits it as a big part of Uber’s success.
No one has exploited the one-click payment as well as Uber. Users must enter a credit card to open an account. After each ride, Uber automatically deducts from that card. And it adds up fast. Triple-digit charges from “surge pricing,” the cost of using the service during peak holidays such as New Year’s Eve and Halloween, may have had people checking their bills, but not for long. One San Francisco power user called Uber her “bill of shame,” and others say that they regularly have no idea what they’re spending.
“I would easily guesstimate I spend $200 a month. But again, I don’t check, so what do I know?” says Sabrina Bruning, an event organizer for a San Francisco-based charity, who first used Uber while stranded in Golden Gate Park after the Outside Lands music festival. “I use Uber almost exclusively, but especially when I’m in a rush. This way, I can just book it out of the cab without the extra hold up of having to pay. That’s a total pain in the ass with cabs — who the hell wants to sit there and debate a tip in their head, sign a receipt, or worse, be told the card machine is broken? Ugh!”
For now, Uber may have found the exception to the rule of consumer price resistance; it doesn’t mean users won’t bail when a lower-priced, equivalent service comes along. Uber competitors have emerged, with San Francisco and New York functioning as the main battlegrounds. Those sober enough to drive can opt for car sharing services such as RelayRides and Getaround. Meanwhile, on-demand ridesharing Lyft and SideCar, which turns personal cars into taxis, have won over Uber enthusiasts.
“Oh my gosh, I love Sidecar. It’s like Uber, but so much cheaper,” said one longtime user, Jonathan Cowperthwait, product marketing manager at awe.sm.
Companies may also search for alternative services or ban Uber altogether. While Braintree encourages its employees to exclusively use Uber for the sake of convenience and record-keeping, other startups (including PandoDaily) have refused to pay for the premium service. As competitors inch into its territory, Uber will need to do more than add new car options to justify the extra, often insidious, expense.
[Image courtesy Epiclectic]