Why Uber raised all that money: To make your rides cheaper
Uber hasn’t exactly been keeping quiet about its attempt to take down the taxi industry, and this summer, it's ramping up the pressure through price cuts.
On Monday, the company slashed prices on UberX, its ride-sharing service, by 20 percent for New Yorkers. Last week, Uber put steeper cuts in effect in San Francisco—the Bay Area UberX option is 25 percent cheaper than usual, and 45 percent less than the cost of a cab.
“These prices are only in effect for a limited time,” the company said in a Monday blog post. “The more you ride, the more likely we can keep them this low.”
A quick trip from Williamsburg, Brooklyn, to the East Village in downtown Manhattan is now $15 in an UberX, compared to $19 before the 20 percent price drop and $16 for a regular NYC cab ride. In San Francisco, an UberX trip from Union Square to the Mission is now $6 versus an $11 taxi.
The new prices don’t apply to Uber’s higher-end black-car and SUV services.
This isn’t the first time Uber has drastically slashed rates. The controversial transportation app regularly plays with pricing as a way to boost business. But after a $1.2 billion fundraising round last month, Uber can easily eat those costs, much to the chagrin of traditional taxi companies, whose rates are regulated by city officials.
And that regulation is exactly why cab companies despise Uber. The app has little competition now in New York, where other ride-sharing companies have been hesitant to launch. Lyft and SideCar don’t operate in NYC. But cabs are ubiquitous in the city. Uber wins on availability in San Francisco, where taxis are hard to hail, but in Manhattan, the company will have to compete on price. With deeper pockets than ever, Uber is playing to win.