How Does Uber Work?

Since launching in 2009, Uber has completely reshaped the way people commute. Few believed the rideshare app would ever amount to much beyond a brief disruption in the transportation industry. Nearly 15 years later, Uber is a top ridesharing app earning billions of dollars in annual revenue. A user-friendly app, a massive network of drivers, and various vehicle options keep Uber at the top of the rideshare pile. But how does Uber work? Let’s take a look at the inner workings.

Uber: The Basics

How Does Uber Work: 5 Fast Facts

• While Uber has grown to include many different services, ridesharing is undoubtedly the largest. Customers can request a ride by simply entering their pickup and drop-off locations, and the app matches them with the nearest available driver.
• Uber owes much of its success to a vast network of independent drivers who sign up to provide rides. These drivers undergo a thorough screening process that includes background checks and vehicle inspections to ensure safety and reliability. Uber has over five million Uber drivers worldwide.
• The idea of dynamic pricing is not unique to Uber. Look at the heat Ticketmaster has caught in recent months for its dynamic ticket prices. Nevertheless, Uber is notorious for its dynamic pricing model called “surge pricing.” During rush hour or bad weather, the price of a ride will increase accordingly.
• Unlike a traditional taxi cab ride, Uber transactions are cashless. Payments are processed automatically through the app. Users link their preferred payment method to their account, and Uber charges them based on factors such as ride distance, duration, and demand.
• Ratings play a significant role in Uber’s service. The app relies on an ingenious two-way rating system to maintain service quality. After a ride, the driver and the rider(s) are asked to rate and provide feedback on their trip.

How Does Uber Work: Explained

The key concept behind Uber is remarkably simple: Safely, securely, speedily, and affordably connecting riders and drivers through a user-friendly mobile app. First, a rider downloads the Uber app to their phone. Then, they open the app and enter their desired pickup and drop-off locations. After that, the app’s algorithm quickly and conveniently pinpoints the nearest available driver and sends them your way. The app factors proximity, availability, traffic, and time constraints to find the best driver for each user.

It doesn’t stop with these several factors, either. Uber’s algorithm also accounts for the user and the driver’s ratings, the user’s preferred vehicle, the driver’s time remaining on their current ride, and whether or not the driver is willing to accept the user’s request. Once the perfect match is made, users see all the pertinent details about their driver (and vice versa). This includes driver and user names, photos, phone numbers, and an estimated arrival time. It might sound like a lot, but it’s all essential to Uber’s past, present, and future success.

And how does Uber work during the ride? For the duration of the trip, riders and drivers can access each other’s real-time GPS locations. This ensures not only transparency but also safety. Unlike a taxi ride, which typically features a meter displaying your rising ride cost, or a bus ride, which features a one-time fee when you get onboard, Uber gives you an estimated cost before you book your ride and a total cost at the end of the ride. The payment comes right out of your preferred payment method, at which point you can also add a tip for your driver.

Various Features of Uber

Uber has some other features and services in addition to ridesharing. One of the most prominent is Uber Eats, a food delivery service. Users can order food from local eateries and receive their deliveries via a network of independent drivers. It functions the same way as Uber. The difference is that Uber Eats transports food. Users browse nearby eateries, place their orders, and track the delivery’s progress in real-time — all from the Uber Eats app.

In addition to operating Uber Eats, Uber also owns fellow delivery service (and former rival) Postmates. Uber acquired the company in 2020 for $2.65 billion. While Postmates offers food delivery, it also expands beyond simple meals to include a wide range of products, including groceries, household goods, and even alcohol. Postmates users can order from local stores and businesses through the Postmates app. At this point, a driver will pick up and deliver the items to their preferred destination.

Uber’s delivery service extends beyond people, meals, and other small goods, including professional transportation. Operating as Uber Freight, the rideshare app hoped to command the freight transportation industry as it did with food delivery and commuters. Uber Freight allows businesses to conveniently find reliable truck drivers to transport their goods safely and efficiently through an easy-to-use platform. (Would you expect anything else from Uber?)

The History of Uber

It’s one thing to know how Uber works, but it’s something else entirely to understand the company’s history. The rideshare company was first founded in 2009. Two entrepreneurs, Garrett Camp and Travis Kalanick, wanted to create a revolutionary new transportation platform. The idea first came when Camp couldn’t secure a cab on a snowy night while visiting Paris. Frustrated, Camp knew there had to be a better way. This bad experience spawned an incredibly lucrative venture: an app that could connect hopeful riders with available drivers in real-time.

Camp and business partner Kalanick was further motivated after shelling out nearly a thousand dollars to get a private driver on New Year’s Eve. That settled it. Something had to change. The duo created a prototype app they called UberCab. Based in San Francisco, California, the app initially focused on luxury transportation for those in the tech industry. The UberCab app connected high-end users with luxurious black cars. It worked like a charm, but Camp and Kalanick quickly realized that a more affordable option to cater to a much larger audience was the only way to go.

Uber rebranded and relaunched in 2011. The following year they brought a new and improved transportation method, which they dubbed UberX. It offered a more affordable option to commuters searching for everyday vehicles and non-professional drivers. While the app’s black car service was still a moneymaker, the real smash success was in UberX. The app gained an incredible amount of traction over the following year. In 2013, Uber was named Tech Company of the Year by USA Today. In 2014, the company launched Uber Eats. By 2019, Uber surpassed 100 million monthly users.

How Does Uber Work Compared to Other Ridesharing Services?

Uber might be the most popular ridesharing service in the world, but it’s certainly not the only ridesharing app in the world. With this in mind, how does Uber work differently than other ridesharing apps? What sets this particular company apart from other ridesharing apps (such as Lyft or Curb)? From global availability to pricing structure, delivery types to the user pool, these factors help Uber stay far above the rest of the competition.

Global Availability

First and foremost, Uber has a much larger global footprint than any of its competitors. The app dominates the market in the United States and abroad. Today, Uber operates in approximately 70 countries and over 10,500 cities worldwide. No matter your destination, you’ll likely be an Uber driver ready to get you from Point A to Point B. This global availability gives Uber a significant advantage over all other ridesharing services.

Pricing Structure

Secondly, there’s Uber’s unique pricing structure; Lyft’s Prime Time works similarly to Uber’s surge pricing model. But Uber’s incentivized price increases for drivers and dynamic pricing structure for riders are far and away the superior pricing mechanisms over the competition. Prime Time relies on percentage-based surcharges during busy windows, but it’s not nearly as fluid as Uber’s surge pricing. In the end, you’re getting a much fairer price with Uber. (Not to mention, drivers are getting much more equitable pay.)

Food and Freight Delivery

Another competitive advantage of Uber’s? The company’s offerings go far beyond simple ridesharinUber’s offerings are pretty diversified from Uber Eats to Postmates to Uber Freight and its other international versions of these services. This range of needs met by Uber’s services only looks more impressive in comparison to its competitors. Uber has conquered transportation, food delivery, and freight in equal measure — and it ropes it all under the same app for even greater convenience.

Uber’s User Pool

Lastly, Uber has a much more massive user pool than any other rideshare app. This goes for both riders and drivers. According to data from 2022, Uber had 5.4 million drivers by year’s end. By this same measure, Uber had 131 million active users. (That’s across Uber and Uber Eats alike — the latter accounts for 85 million users.) Lyft had just two million drivers and 20.3 million riders in 2022. Uber could utterly dominate the rideshare space based on its user pool alone.