Ride-Share Pricing, Capacity, and Profitability Case

Context (assumptions made explicit)

• Each driver can complete up to 5 rides per hour and works an 8-hour day (max 40 rides per driver per day).
• Drivers are paid a fixed $700 per driver per day.
• Fixed platform/overhead cost is $10,000 per day.
• Unless otherwise stated, demand volumes (rides) are fixed and must be fully served. Prices quoted are per ride. For Question 4, assume non-peak price remains $30 and only peak price changes.

Questions

1. What key factors would you evaluate when assessing the financial feasibility of the ride-share business?
2. Given 2,400 rides per day at $30 each, drivers paid$ 700/day, a maximum of 5 rides per driver per hour over an 8-hour day, and a fixed daily cost of $10,000, calculate the daily profit.
3. How could you further increase profit, and what advantages can the app offer versus street-hailing taxis? Explain the role of supply–demand balance.
4. The day is split into 4 non-peak hours with 800 rides and 4 peak hours with 1,600 rides. Drivers work the full day. What peak-hour price per ride would make total daily profit equal to the profit computed in Question 2 (keeping non-peak price at $30)?
5. Provide additional recommendations to improve the business.