Deepak Shenoy of Capital Mind has an interesting post on MediaNama titled "The Economics of Using Uber in India". Extracts:
Uber advertises its lowest fare in Bangalore at Rs. 7 per km charge but that is utter bull. For an average 10 km ride in the city, it costs much more:
a Rs. 35 base charge that has no free usage, which would be Rs. 3.5 per km.
Rs. 7 per kilometer run
Rs. 1 per minute as a driver fee. For an average of 3 minutes per kilometer this comes to Rs. 3 per km.
These add up to Rs. 13.5 per kilometer. That’s how much you pay for an auto as well.
...The annual costs of a car are tiny nowadays (Rs. 1 per kilometer, assuming Rs. 12,000 service costs for Rs. 12,000 driven). So if my car gives me 12 kms to a liter of petrol, i’m still paying just Rs. 5.5 per km for petrol and Rs. 1 for parking.
Add to this the convenience of owning a car, the ability to get groceries from hypermarkets that can’t or won’t deliver, the ability to drive your kids to a location just 2 minutes away because walking will kill you (welcome to Bangalore, just don’t walk anywhere). And the underappreciated advantage of being able to just up and leave at 6 am to smell the fresh air in the western ghats.
And then, Uber cars are not available when you want them – wait times are upwards of 10 minutes most of the time, unless you’re in a favoured location. Then, there are spikes – if it rains, Uber goes to 1.5x “surge” pricing. All this will not vanish because drivers too have their economics which ensures such practices (long wait times, surge pricing) will continue.Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to Sign Up for the FREE Weekly Edition of the Deal Digest: India's First & Most Exhaustive Transactions Newsletter.