Published on December 15th, 2014 | by Diogo Costa

Uber’s Business Model is Growing: Why?

Uber is a company and service that has been under the spotlight in the last couple of weeks. Either because of its huge market value or because the legal problems in some European countries, it is one of the hottest companies at this time.

Uber is also an app that people use to call for a (obviously paid) ride, with the option of choosing your desired vehicle: uberX, taxi, black, SUV, and lux – each with its own cost, and each fitting different occasions. People can also apply to become a driver for Uber, which is a valuable source of income to many people.

So, in order to provide this service, Uber resorts to individual employees, instead of hiring its own team of drivers. Anyone can apply, with Uber doing background and driver’s license checks. Then, the company keeps a share of the driver’s profits, which is a central point in the company’s business model. But how common is this model in the market, nowadays?

In fact, it is getting more and more common. A great example is Lawn Love, a web app that offers a fully-featured lawn service, that will not only mow but also undertake a complete process to care for your lawn, with the help of skilled lawn care technicians that will do a great job, providing a complete satisfaction guarantee.

Similarly to Uber, Lawn Love subcontracts individuals and even local small businesses that will provide the services mentioned above, while keeping a share between 20 and 30 per cent of what the employees make.

The important aspect here is to understand why this happens. The main reason for this may be related exactly to that subcontracting aspect. By not directly employing these workers and taking a share of their revenue, the companies establish huge savings, by not having to directly pay workers on a constant basis, and having a steady income source. As mentioned by Bloomberg, without this model of work, these businesses would not be as successful.

Tags: business, Jobs, uber