How Much Do You Save by Using Uber?

Uber App

People use Uber because it’s convenient, easy and considered less expensive than traditional taxis. But how much cheaper is UberX — the company’s low-cost option — than a cab in Canadian cities? As it turns out, it depends a lot on which city you live in. Ever since Uber arrived in Toronto in 2012, the company has expanded rapidly, now operating in ten Canadian cities, the newest of which is Calgary, which is enjoying its first month of service. The company accumulated its share of controversy over the past three years, as taxi companies, which must offer metered fares set at the municipal level, are struggling to compete with a business model that many see as a cheaper, faster, and more pleasant way to get a ride across town quickly.

Uber Prices in Canada

In most Canadian cities with UberX, our study shows that the company charges between 30% and 50% less than what a taxi would charge for the identical route. Toronto, Ottawa and Montreal see the largest gain in picking Uber over a taxi, where customers save 50%, 44% and 41% of what their average taxi fare would be, respectively. On the other end, Quebec City (24%) and Hamilton (29%) see the smallest savings compared to the equivalent cab fare. Short routes around the city tend to offer slightly smaller savings than longer routes. This is due to the different pricing structure of the two services; whereas taxis typically charge a sizable per-distance rate plus a small per-minute rate when in stopped or slow traffic, Uber typically charges a smaller per-distance rate plus a standard per-minute rate (regardless of speed). As a consequence, longer high-speed routes (for example, along the highway to the airport) are even more cost effective on Uber.

Average UberX Savings in Canada

What allows Uber to offer such deep discounts in some Canadian cities while providing more modest savings in others? One theory is that taxi prices may be so exorbitantly high in places like Toronto, Ottawa and Montreal, that Uber can easily afford to undercut taxi rates by 40-50% without breaking a sweat. Indeed, the data appears to bear this out: Toronto’s taxi rates are among the highest in the world (even after the recent $1 reduction in base fare), followed closely by — you guessed it — Ottawa and Montreal. Another theory is that Uber is strategically selecting large markets in which they aggressively pursue market share by offering rock-bottom prices; the company has been known to dip into its deep coffers to keep drivers on the road (for example, by paying their tickets). In Toronto, at least, the company appears to have succeeded in building an impressive market share.

Uber isn’t always the best choice over a cab, however, especially when taking it during its surge pricing. In order to encourage more Uber drivers to take to the streets during high demand times, like when a Blue Jays or Canadiens game lets out or when public transit shuts down, fare prices can rise substantially. Each city has a unique point at which Uber fares need to rise before it becomes cheaper to hail a cab – in Toronto and Ottawa, it is roughly when fares are doubled, but in other Canadian cities it can be slightly less. As a rule of thumb, when surge prices pass the 2x mark, begin looking for a cab; unlike Uber, taxi rates remain the same, regardless of how busy they might be. However, increased demand usually comes about when everybody is hunting for rides, so tracking down that open taxi might be easier said than done. It’s uncommon for surge prices to rise significantly without a lack of free cabs in the area. As a result, many Uber users choose to bite the bullet and pay the extra fare instead of trying to hail an elusive cab.

Methodology

The 10 and 3 examined nine of the ten Canadian Uber markets. Halifax was omitted because the service does not have a reliable presence in the city, and does not (nominally) operate beyond a modest area within the municipality. For each city, four routes were collected, originating at the central PLVI intersection (for instance, King and Bay in Toronto); three of the routes ended at important travel points within the city (ex. the West Edmonton Mall, High Park in Toronto, or Universite Laval in Quebec), while the fourth went to the major regional airport. The Uber vs taxi savings were averaged across these four routes to get a city’s overall average discount.

Cost for UberX and taxis for these routes were collected from TaxiFareFinder and Uber’s own fare estimates and pricing structure guidance. Costs are computed with the assumption of zero-to-low traffic levels. Taxi costs include a customary 15% tip whereas our UberX costs do not include an added tip (it is not possible to tip within the app and gratuity is generally considered part of the fare).

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  • John Stamos

    It is such a great service, my old 55$ cab ride now costs me 22$. Shows how broken the current system is and I feel bad for a lot of taxi drivers just trying to make an honest living.

    • Lord Farquad

      This this this. I strongly believe that the whole “Taxi Industry” is long overdue for their takeover. They’re generally just so outdated and old and gross and expensive and scummy…I don’t know how this ‘rideshare’ idea took so long even. Now maybe it’s just my cheapy tendency, but I try to plan out my rides longer before most. then i put in the exact route i WILL be taking on http://uberestimate.com, maybe take note of the fare url esp. if its a busy ‘Uber’ night, then i simply recheck it every minute or two if theres some crazy surge price. i wait until the surge is gone or very diluted before i leave (which is why i start early)….i have saved a boatload of $ AND for what its worth, MOST surge prices change or completely disappear within 5min on average. guess it depends on the area and day of the year too though, some nights like New Years are just nuts no matter what.

      • John Stamos

        Yes I do the exact same. And exactly high demand nights are high demand nights nothing you can change there, every business and services is generally maximized. I do feel bad about taxi drivers losing employment or being forced out as they have mouths and families to feed just like everyone else but they need to get with the times. They are not buying much sympathy from the community and general populace either though when they assault people during their “peaceful” protests I might add.

  • Barry Wilson

    This does not explain how uber rides are cheaper. I am not a Taxi driver nor do I use them. I am against illegal organizations. They charge lower because they don’t follow the law and endanger public safety. Anyone reading this may never be in a pay for transportation car accident. That doesn’t mean it doesn’t happen. And passengers seriously hurt are not covered by a driver’s personal insurance and there has never been a case of Uber using it’s talked about insurance. I have this info by emailing non partisan followers of the transportation industry. Using uber is the same as buying stolen TVS from the gang that robbed the truck.

    • The 10 and 3

      Hi Barry. Thanks for your response. While your claim that Uber doesn’t follow the law is certainly a point worthy of debate, I am not sure why you believe they endanger public safety. Are you able to point to any sources indicating that Uber drivers have a poor safety record relative to taxi drivers or that a passenger hurt in an Uber car was not covered by an insurance policy? We have not found any corroboration for that claim.

      • Barry Wilson

        Hello
        Not sure where this site is based I am speaking from Canada and so my statements reflect Canadian law.
        Uber not following the law is not worthy of debate as it is a airtight fact. It is also their business model. Each province classifies a person who drives a car and takes passengers from one place to another for money classifies that car and driver as a commercial vehicle that by law must have a commercial license, commercial insurance. The driver must have training pass the course and receive a transparent background check.
        Their vehicle must pass an inspection from mechanics designated by the area licensing board. Uber does none of these things. They don’t reveal results of background checks. They tell the drivers their regular license is enough and that their commercial insurance is fine. Though Uber tells the drivers to check with the drivers insurance company. I have read articles and called my insurance company. If drivers called their insurance company they would be told that they need commercial insurance and that any accident they are in where they are carrying paying passengers will be denied. I have never heard of any uber passenger who was paid by uber’s secret insurance. I contacted a Car and driver website that had positive things to say about Uber and offer advice. They have never heard of anyone being paid by Uber’s insurance. Uber’s website, that likes to dump a lot of numbers around to show how great they are. Don’t say in reference to their policy. For example “x number of uber passengers have been successfully covered by our insurance. That would be a comforting fact for possible Uber Passengers. Insurance companies often advertise on how they take care of your claim quickly in case you are in an accident. Uber never uses this excellent PR info. I expect that these 2 reasons show that Uber does not pay insurance claims.

        All those requirements to ensure that both driver and vehicle are transparently following laws that try to ensure that taxi drivers and their vehicles are sage cost money. So Uber breaks the law and is able to charge less.

        I have found no statistics comparing Uber drivers to Taxi drivers. So let’s call it equal in accidents. But Uber drivers are asked to send a copy of any mechanic’s assertion that the vehicle is safe. I am sure you would agree that finding a mechanic who would write a statement that the car is fine would not be difficult or that expensive. Uber does not require a point by point report covering all the cars safety features. So who knows.

        as for a source for the fact that UberX cars are a threat to public safety comes from my area where the just started up. In the Niagara region of Canada. The regional police are in charge of licensing and the policeman at that office told me that there concern as police is public safety and since UberX drivers do not comply with the laws regarding those that drive others around for money or to use a more accurate word. Taxis. Since the drivers do not submit themselves as viable drivers and since their cars are not put through a real inspection and since they don’t carry commercial insurance to cover accidents. They are a threat to public safety. It sounds perfectly reasonable to me. Of course care accidents even in heavily driven cars like these are the minority, people who don’t mind breaking the law if it saves them money use Uber and are stastically unlikely to be in an accident. But statisticaly there will be accidents in Uber vehicles, Who cares about those people? Since Uber has low standards despite what they say, an uber driver and vehicle is probably more likely to get into an accident and then have their insurance claim denied. Meaning that they will have to pay for any repairs if the car is repairable.

        One of the things that really bug me is how so many people, journalists and politicians refer to it as Ride Sharing. I want to ask them the question. What exactly is shared. A driver picks up a passenger drives them somewhere and the passenger is charged for the service. The passenger didn’t borrow the car. They were driven around for money. That is not ride sharing nor is it part of the sharing economy.

        The fact alone that Uber likes to throw around those false words are enough to make it suspect.
        I will keep looking if anyone has done a study on Uber Vs Taxis in terms of accidents. Both areas have drivers that have been at fault for terrible accidents and terrible crimes.
        I don’t like Criminals. I wouldn’t eat in a restaurant that advertised it did not adhere to the food handling and preparation laws.Just because the food was cheaper
        Why should I get into a car that disobeys all the laws concerning safety?

        • Viachy

          Why then, if they are blatantly illegal, do they not just get a class action against them, causing them to shut down?

          • Barry Wilson

            Dear Viachy, First I should explain that you are using the wrong term. a class action suit is brought by a large group who have the same complaint against a company or another individual. People who have had adverse effects from a drug may launch a class action suit against a drug company.
            Governments are supposed to enforce the law. The response around the world is different. In France, Uber executives have been arrested.
            In Canada, different provinces and cities are responding differently. In Montreal they fine and often confiscate the cars of driver owners who are with Uber. The provincial government is investigating them for tax fraud.

            In Toronto they fine drivers but leave uber alone. Why? Good Question. No good answer

            Why did the U.S government not prosecute executives from the many banks that committed illegal acts in 2008? Why do they only give them minor fines when these banks commit criminal acts now?

            Uber spends a lot of money on lobbying. I don’t know if that means bribes.

            But other than Quebec, Uber is allowed to continue while the drivers are the ones fined. Large companies are allowed to get away with committing crimes all the time.
            It should not be like that but it is.
            Do some research into corporate crime and what consequences they receive.
            You can also research how California passed a law allowing uber to operate. Uber praised the law. But then they started breaking that law as well.
            That is as good an answer as I can give. Do your own research and you will see how Uber breaks the law and pays no consequence.
            I am glad France is arresting Uber execs
            All the best
            Barry

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  • Alex Laney

    I wonder how long this uber phenomenon will last. Seems so like napster. Scoff laws. We haven’t heard yet from uber drivers and how much back taxes they will be charged. That will have to come. Because the CRA will either judge them to be employees or they will have to register for GST etc. and have to pay that back.

    Conversely, if uber wipes out the taxi industry, will fares go up to taxi levels? Nothing to stop them. And unregulated.

  • Vince Bardsley

    Factoring in tips is unfair. Tips are the same across the board, you do not HAVE to tip the taxi driver.