Set Monthly Fees for a Two-Level Uber Membership from Rider Savings and Margins

Uber is adding a subscription with two tiers, Tier 1 and Tier 2. How would you set the price of each tier? Back the prices you propose with estimates, and state every assumption you make along the way. ```hint Start from the rider Think about the rider each tier is meant for: how often they ride, what the membership would save them, and what Uber gives up by discounting trips that rider would have taken without a subscription. ``` ### Clarifying Questions - What do the tiers include: ride discounts or credits, waived fees, a prepaid bundle of rides or miles, or perks such as priority pickup? Or is designing the tiers part of the task? - Is the subscription for riders, and does it cover only rides or also food delivery? - What is the main goal: fee revenue, more rides per member, or keeping riders who also use Lyft? - Which market are we pricing for, given how much fares and incomes vary by city and country? ### What a Strong Answer Covers - What each tier includes and which rider segment each one is built for - A price band for each tier: a ceiling from the member's expected savings and perks, and a floor from Uber's break-even, including the cost of discounting trips members would have taken anyway - Estimates with every assumption labeled, correct arithmetic and a sanity check - A check that each segment prefers its own tier, plus a comparison with competing options such as Lyft - A plan to validate the prices with tests, and success metrics with guardrails ### Follow-up Questions - Early data shows most subscribers are heavy riders who take no extra trips after joining. What would you change? - Should the member discount come out of Uber's share of the fare or out of driver pay? Why? - How would you test different price points without riders seeing unfair differences?