The on-demand car service known as Uber has recently slashed prices across the country
an action that some believe could turn the transportation market on it's head.
If you live in a major U.S. city and don't use your own car to get around you may have
heard of the ride-sharing app Uber which lets riders make on-demand requests to drivers
for transportation.
If you don't use it now investors are betting you will soon, According to AllthingsD, in
August, Uber had a $3.5 billion valuation with the largest backing coming from private
equity giant TPG and Google Ventures.
Forbes also rated Uber among its Top 13 startups of the year claiming the app has gained traction
with everyone from, "drunk college students to overworked soccer moms"
The cuts in prices will specifically target the UberX service and will cut prices anywhere
between 2 and 30 percent.
Uber X is not available everywhere but the slash in prices will effect 16 major cities
out of the 23 where the lower cost option is available.
With this cut in pricing, many tech writers believe people will be opting out of traditional
taxi's.
VentureBeat writes, "In general, Uber provides a valuable service that is much more reliable,
dependable, and accountable than San Francisco's third-world cab system."
TechCrunch adds, "For a business that operates on low margins already, that's a pretty dramatic
reduction.
And it will put a whole lot of pressure on the competition."
Oh and speaking of the competition it's not going quietly.
Lyft, the other on-demand ride-sharing app has a response to Uber's new price cuts.
"Uber prices will still be higher.
What does a price decrease mean when there is 8-10x surge pricing?
It's classic bait and switch and consumers see through that."
And various taxi commissions attempted to impose substantial regulations on the new
app in some major cities earlier in the year such as D.C. and New York to keep the traditional
taxi service afloat.
"In our statute we're charged with keeping an economically viable taxi cab industry.
We can't make decisions that allow one element in the industry to up end all the other elements"
Despite ongoing fights across the country with various taxi commissions Uber has been
able to not only operate but thrive.
The company reportedly brought in upwards of $200 million at the end of 2013 and has
about 1 million ride requests per week.