This is very fascinating – Uber wants you to pay subscription for some of its services. And once you pay, you can get free food delivery via Uber Eats, free scooter ride, free bike rentals and discounted ride-hailing for cars. They have already started this in San Francisco and Chicago.
Uber is actively testing a monthly subscription pass that combines rides, Eats, bikes and scooters. In this pilot phase, Uber is testing a few different iterations in San Francisco and Chicago, but each version includes a fixed discount on every ride, free Uber Eats delivery and free JUMP (bikes and scooters) rides. The pass costs $24.99 per month.
In other cities, Uber is testing lower-priced passes that offer discounted rides and free delivery on Eats orders above a certain amount.
I do not know how you see it, but I see it as optimal for just $25 monthly.Yes, with $25, you can get all those benefits which could have cost you multiples of $25 if done separately. By combining its subscription services, Uber can use the revenue to offer better services just as Amazon does with Amazon Prime. Prime members get free and faster shipping.
Subscription will make Uber revenue more predictable. And brings unification at scale which will enable greater asset utilization by customers in the Uber world. Yet, the pricing will be better done annually than monthly. I do expect Uber to do that, and offer discounts to those that subscribe for annual plans over monthly packages.
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Innovation in pricing is very critical and getting cashflow ahead will be strategic for Uber to keep growing even as Lyft continues to come around. But at the end, I do expect Lyft to be bought by some major car manufacturers (possibly in a consortium) who will need Lyft platform to push their vehicles or Uber will swallow it.
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Uber ought to have done this before now, but it’s not late if it starts now.
One of the key features in digital platform business model innovation is that ability to lock up and own customers, and there’s no better way to do it than offering subscription based pricing regime.
You cannot build a predictable cashflow by simply relying on the feelings of your customers, there must be a minimum revenue expectation that should be predictable. It allows you to plan and utilize capital better.
Uber must focus on annual subscription, it’s a better way to stimulate demand, rather than just hoping that people will hail a ride from time to time, such uncertainty must be minimised.
In no distant time, all platform businesses will revert to subscription model, you earn your income before customers change their minds; that’s the catch!
Uber will need a hybrid model to accommodate those who do not have enough to go the subscription path. Both models have opportunities.