In today’s edition of #TLGGBites, we explore why services like ride-sharing and food delivery apps have gotten so much more expensive so quickly?
In short, the answer is for most of the history of these services, users weren’t paying the full, true cost of providing those services and doing so at a profit. Now they’re being asked to.
Companies like Uber, Postmates, DoorDash, and the like have struggled with profitability throughout their existences. That’s because profitability wasn’t necessarily their primary goal. Buoyed by robust amounts of venture capital available at very low interest rates, the main directive of a lot of these large disruptor start-ups was to grow, grow, grow! So, they did—by offering their services cheaply and operating at a loss. Many of these outfits were playing a long game. The environment has shifted now though. Rising #interest rates have choked the #VC flow and investors in these outfits are demanding return on their investments. That means that the subsidy gravy train is coming to an end. Frankly, despite the casual way these services are used, taxis, meal delivery, meal prep and such are luxury products—and if they’re going to be viable businesses, they’re going to be priced as such!
How has your use of these types of services evolved due to pricing shifts?