How Much Does it Cost to Build an Uber-like Taxi App in 2020?
Over the past five years, app-based ride-hailing services have displaced traditional taxi companies. They offer convenience, transparency, security, sharing, competitive pricing, and attractive offers — features that were virtually unheard of earlier.
Uber, the pioneer in disrupting the passenger transportation industry, was founded in 2009 and changed taxi rides forever. In just over a decade of existence, it has established itself in 700+ cities on six continents, according to S-1 SEC filings. While the competition is catching up, Uber owns 65-70% of the U.S. market. On a normal day it does a staggering 14 million trips globally!
Curious to know what it costs to create a taxi app like Uber, and what’s involved in building one?
In this article, we’ll break down the seemingly overwhelming process of building a taxi app into simple steps such as market research, required features, planning development in stages, and finally, estimating costs.
Taxi App Market – A Global Perspective
In the past decade, many app-based cab companies have appeared around the world. They offer customized services that cater to the demands of specific geographies. User penetration is on the rise, and it’s estimated that half of global taxi rides will be ordered via online channels in the next five years.
According to Statista, the taxi app market generated a revenue of $302 billion in 2019 and, despite the effects of COVID-19, 2020 is expected to generate $192 billion. The market is expected to pick up thereafter, clocking a healthy CAGR of 17.5% and generating $365.9 billion in revenue by 2024.
China, with a user penetration of 36.4%, leads the global revenue generation market. It’s expected to make $55 billion in 2020, followed by the US ($41 bn) and India ($26 bn).
Uber has taken rapid expansion steps and leads the way, having served over 75 million customers in 2018. However, it is not unchallenged. It faces constant competition from many localized players such as Didi Chuxing, Grab, Lyft, Ola, etc. In fact, China’s Didi Chuxing drove Uber out of the country and is now gaining ground on its own turf via an investment in Lyft.
As populations continue to migrate towards cities, many transportation services companies have elaborated on the taxi app model and added different layers to it. Apps that provide self–driving cars, bike taxis, and scooter rentals have carved their own niche in the crowded transportation market. In addition to being affordable, these mediums reduce congestion in cities, control pollution, and are viewed as sustainable, environment-friendly options.
Let’s review the features that drive these ideas and make a taxi app run like a diligent, accurate, and efficient machine.
What Are the Typical Features of a Taxi App?
A taxi app is a digital engagement platform that lets users access a host of services other than just taxi bookings. Uber, the most valuable online taxi booking company, has shown the way by developing and integrating state-of-the-art features that make it stand out from the others.
Here are the basic features every taxi booking app should include:
This feature will be used the most, and you need to design it with all user groups in mind. While digital natives will figure out your app on their own, you need to connect with the elderly in an instant and make sure they won’t be intimidated by the technology.
Booking needs to be enabled in a minimal number of steps – as in, all a user needs to do is to fill in his or her from and to locations. It will be even better if your app can read his/her current location as the default from point.
There are different approaches to calculating fares. You can opt for a flat fee based on distance and type of car chosen, or take traffic conditions into account and add a component to reflect ride time. Based on your pricing model, a back-end algorithm will calculate the total trip fare. Leading apps do this calculation beforehand and give the users an approximate fare based on the taxi type, distance, traffic conditions, and availability.
Displaying Trip Details
To win customer trust and maintain transparency, you need to give them a cost estimate of their trip in advance. Passengers like to have an overview of their trip before they confirm it. Details such as which types of taxis are available, how much each will cost, what the expected ride time is, and how far away the driver is, will give them the available options before they confirm the ride.
Finding a Driver
Once a customer agrees to the trip details and confirms the requirements, the request is assigned to the nearest available driver. In some regions this works differently, as the request is floated to all drivers until one of them accepts it. Either way, the objective is to connect the passenger to a driver. While the app finds a nearby driver, it’s important to keep the customer engaged and show a live map of the nearby taxis so they know what’s going on.
Confirming the Trip
The driver does not know the trip details unless they are assigned to a new order. Once assigned, they have the option to reject the trip, in which case the ride will be assigned to the next nearest available driver. Take a balanced approach and have business logic in place that discourages too many rejections by a driver in a given period.
Connecting Passenger to Driver
Once a driver accepts the assigned ride, he or she is connected to the passenger. The passenger gets the driver’s details (taxi number, make of car, estimated time of arrival, driver rating, real-time location) and vice versa. This is the time when they discover each other’s locations so that the driver can start moving towards the pick-up point and the passenger can know the driver’s ETA.
This can be done in a number of ways. Digital payments are gaining in popularity, and digital payment integration must be an important component of your overall taxi app development costs. Your app should have the ability to acknowledge payments through QR codes, bank cards, mobile wallets, net banking, and good old cash.
Once the trip is over, the passenger and driver get a chance to rate each other. It’s helpful to keep the system transparent. A consistently good or bad rating for a driver will affect his or her future trips. The highest-rated drivers can be rewarded with more rides and earn higher commissions. On the other hand, drivers with bad ratings can be warned and re-trained. It helps the company retain good drivers, train those who need improvement, and eliminate those who fail to display the expected levels of professionalism.
At the passenger’s end, a highly rated passenger can be rewarded through better deals and preferential treatment during ride assignments. A passenger with a history of bad behaviour and a low score will have a tough time finding a driver, as drivers can reject their booking request.
Here we share our best practices, technical solutions, management tips, and every useful insight we’ve got while working on our projects
The Stages of Taxi App Development
Planning to build a taxi app? Given Uber’s complex yet efficient workflow, one can easily be intimidated by this thought. However, your job will be simpler if you break it down into different stages, plan each component/module separately, and then hire taxi app development services to execute your plan.
Stage 1: Market Research
The first step of taxi mobile app development is research, because every market has a different dynamic that changes over time. Your research will help you understand consumer preferences, demographics, travel patterns, and existing solutions in your proposed market. You will then get to know the pain points, which can be an opportunity for you to define the precise segment you need to tap into. This is how geographical regions and demographics can shape your ride offerings:
- Offer shared rides between well-defined residential and commercial regions
- Launch bike taxis and self-drive scooters around educational institutions
- Offer long-term rental services for metropolitan cities with a young working population
- Offer 4/8/12 hour packages for regions with dense commercial and office spaces
Stage 2: Develop a Business Model Canvas
Quite simply, a business model canvas is a snapshot of your partners, the value proposition for each stakeholder, core competencies, value proposition, cost structure, revenue stream, customer segments, and marketing media. You have to take a 360-degree view of your app and drive it forward by balancing all the parameters.
A revenue model identifies potential sources of revenue and works out the pricing structure for each. After all, your business must be able to recover the cost to make a taxi app as soon as possible. After that, there should be enough revenue generated to offset the operational costs and generate returns on your investment.
Uber has three revenue generators:
- Drivers – Charged 20%-30% of each bill
- Passengers – Charged a flat fee per booking, plus a cancellation fee for each canceled ride
- Promotions – Promoting other brands through app and fleet
Stage 3: Taxi App Development
We recommend approaching an established taxi booking app development company and build native apps from scratch instead of using prefabricated templates. It will ensure your app works well with all operating systems and has customized configurations for each. You typically require three interrelated components:
Developed for passengers, this app should have intuitive features. Depending on the technology and platforms you choose, it will take between 500 and 700 hours of work to produce the following feature set:
- Registration – Allow registrations through all contemporary processes (i.e., email, social networks, and mobile numbers).
- Taxi booking – The core functionality includes location selection, booking request generation, review trip details and confirmations or cancellations.
- Payments – Give passengers the flexibility to pay the way they want (i.e., with mobile wallets, cards, direct bank transfers, and cash).
- Card details – Successful apps allow users to save their card details so they can be charged automatically without having to enter them for each payment.
- Fare calculator – The app should generate the fare automatically once a ride is over. This calculation should clearly break out the different fare components and taxes.
- Tracking – This feature lets users plan better, as they can see how far away a taxi is, its estimated arrival time, and route.
- Notifications – Passengers don’t want to miss out on key events such as booking confirmations, taxi arrivals, the end of a trip, payment confirmations, etc. Enabling push notifications and sending SMS covers this. Vendors such as Twilio, Nexmo, Sinch can do this for you.
- Ride history – A ride history helps users track their movements and access past invoices and common destinations for quick bookings.
- Driver’s review/rating – This incents drivers to behave and perform professionally and gives passengers have an organic knowledge pool they can use to check their driver’s history.
- Profile management – Passengers can change addresses, their payment options, use a different mobile number, etc. Having this feature lets you capture their updated information and provide delightful service across locations.
Drivers and partners will each have a different view of the app, as their requirements will differ from that of a customer. While planning your taxi app development costs, set aside approximately 300–400 hours for this module. It will include:
- Registration – This is used for recognizing a user and mapping his/her data. It can be similar to the passenger app, where a user can register/log in using a social media account, mobile number – OTP combination, or his email ID and password.
- Status update – A driver needs to keep the app updated about his or her working hours.
- Accept/reject booking – Your driver needs the ability to accept or reject a booking whenever a new request comes his or her way.
- Booking history – It will help them track the places they’ve driven, number of rides completed, earnings, etc.
- Notifications – This is required to remind drivers about their upcoming ride, rating, targets, incentives, etc.
- Infographics – A neatly designed infographic will help drivers access and analyze their ride information (rides completed, earnings, hours available vs hours worked) for a specified period ( i.e., day, week, month, or quarter).
This for management and monitoring of all app users (i.e. drivers and passengers). Using this app you can run analytics and generate reports, which will help you structure promotions, marketing campaigns, and overall strategy. On average, you should set aside a total of 800-1000 hours of work for this module.
Stage 4: Deploying Your Taxi–Booking App
Now it’s time to push your app out to users and deploy it in live environments such as the Google Play Store, Apple’s App Store, and other popular repositories. Make sure you do a thorough security audit and comprehensive penetration testing before planning a go-live. This will require further tuning to comply with the guidelines of the respective directories. You also need to raise awareness of the app through online/offline advertising channels so passengers know about your company.
Stage 5: Maintenance and Technical Support
Despite the best efforts of testers, bugs are bound to creep in. There can be compatibility issues with newer O.S. versions, and users might run into trouble using the app. In that case, you’ll need to deploy the latest security patches to keep your app safe from malware attacks. There should be a team of technical support experts dedicated to this purpose.
How Much Does It Cost to Build a Taxi App?
Now that you have a detailed roadmap of your app development, you’re in a good position to estimate how much does a taxi app cost. There are separate rates for developers around the world. While a developer in the United States will charge in the range of $60-$250 per hour, in India they will charge you $10-$80 an hour.
Your total project duration will likely be in the range of 2000 to 2500 hours, typically accomplished by a team of 5-7 developers working over approximately 16 weeks.
This infographic should give you a fair estimate:
This is just an estimate based on several approximations. If you let us know your specific requirements, we can help you determine and customize a budget for your app.
Top Taxi Apps to Draw Inspiration From
Studying competitors at the top of their game is a good practice. Here are some of the best taxi apps and the features that make them stand out:
A case study in taxi apps, this San Francisco-based pioneer has a global presence. Its user base consists of over 100 million riders who have clocked more than 1.7 billion trips (Nov 2019). Salient features:
- Uber X: A standard, economical offering where passengers get cabs not more than 15 years old that can seat up to 4 passengers.
- Uber XL: Standard offering for large groups, with a fleet of 4-door, 7-seater vehicles.
- Uber Select: Newer cars with premium interiors, driven by drivers rated 4.5+, and having completed 50 trips.
Uber Black/Black SUV: A luxury sedan or SUV with a comfortable interior and less than 5 years of age. It’s the perfect choice when you want to arrive in style.
Another San Francisco-headquartered online taxi booking company that has a considerable presence across the United States (644 cities) and Canada (12 cities). It is best known for its pink theme and mustache logo. It provides car rides, shared bicycles, scooters, and food deliveries.
Similar to Uber, it has several tiers of services such as Lyft, LyftXL, Lyft Shared, and Lyft Lux.
There is another San Francisco-based company that operates in 45 U.S. cities. It is expanding rapidly and already has over 50,000 cabs on its platform.
Curb has positioned itself differently. It takes you back to the cab culture of yesteryear, but through the convenience of modern technology. It charges users a service fee of $1.95 per ride, and even though you receive an estimate of your trip cost, the actual cost you pay is what your taxi’s meter shows. Although a bit expensive, it’s a great way to support local cabbies while enjoying the same convenience offered by Lyft or Uber (minus the surge).
Summing It Up
Shared transportation is a booming business. More than half the world has yet to be penetrated, and with everyone looking for sustainable and affordable transportation in crowded cities, it’s a good time to build an app that provides them with options. Technology takes giant leaps every year, and it’s only a matter of time until Artificial Intelligence, Machine Learning, Blockchain, and Cloud Computing will come together to power driverless cars and reduce costs further.
Now that you have an idea of the investment it takes to build a taxi app, you’re in a position to find your market niche and load your app with suitable features. Our advice is focus on simplicity and building a value proposition for the end-user, rather than opting for sophistication.